[Federal Register Volume 60, Number 164 (Thursday, August 24, 1995)]
[Proposed Rules]
[Pages 44146-44150]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-20842]




  Federal Register / Vol. 60, No. 164 / Thursday, August 24, 1995 / 
Proposed Rules  

[[Page 44146]]


FEDERAL RESERVE SYSTEM

[Docket No. R-0888]

DEPARTMENT OF THE TREASURY

31 CFR Part 103

RIN 1506-AA16


Amendment to the Bank Secrecy Act Regulations Relating to 
Recordkeeping for Funds Transfers and Transmittals of Funds by Banks 
and Other Financial Institutions

AGENCY: Department of the Treasury; Board of Governors of the Federal 
Reserve System.

ACTION: Joint proposed rule.

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SUMMARY: In January 1995, the Financial Crimes Enforcement Network 
(FinCEN) of the Department of the Treasury (Treasury) and the Board of 
Governors of the Federal Reserve System (Board) jointly published a 
final rule that requires enhanced recordkeeping related to certain 
funds transfers and transmittals of funds by financial institutions 
(the joint rule). Also in January 1995, the Treasury adopted a 
companion rule, known as the travel rule, that requires financial 
institutions to include in transmittal orders certain information that 
must be maintained under the joint rule. The joint rule sets forth 
definitions of terms used in both rules. The original effective date of 
these rules was January 1, 1996. Subsequent to adoption of these rules, 
several banks have expressed concerns to the Treasury and the Board 
that compliance with the joint rule and the travel rule would be 
complicated if the parties to an international transfer were defined 
differently in the Bank Secrecy Act regulations than they are defined 
in the Uniform Commercial Code Article 4A. The Treasury and the Board 
have proposed amendments to the joint rule's definitions and technical 
conforming changes to the substantive provisions of the joint rule to 
conform the meanings of the definitions of the parties to an 
international transfer to their meanings under Article 4A of the 
Uniform Commercial Code. These proposed amendments are intended to 
reduce confusion of banks and nonbank financial institutions as to the 
applicability of the joint rule and the travel rule and to reduce the 
cost of complying with the rules' requirements. The Treasury and the 
Board believe that the proposed amendments will not have a material 
adverse effect on the rules' usefulness in law enforcement 
investigations and proceedings. The proposed amendments should not 
affect a bank's responsibilities under the rules with respect to 
domestic funds transfers. Due to the uncertainties resulting from these 
proposed amendments, the Treasury and the Board have delayed the 
effective date of the joint rule; a document delaying the effective 
date of the final joint rule until April 1, 1996, is published 
elsewhere in today's Federal Register.

DATES: Comments must be submitted on or before September 25, 1995.

ADDRESSES: Each comment should be sent separately to both the Treasury 
and the Board at the following addresses:
    Treasury: Office of Regulatory Policy and Enforcement, Financial 
Crimes Enforcement Network, Department of the Treasury, 2070 Chain 
Bridge Road, Vienna, VA 22182, Attention: Funds Transfer NPRM. Comments 
may be inspected between 10:00 a.m. and 4:00 p.m. at the Treasury 
Library, located in room 5030, 1500 Pennsylvania Avenue, N.W., 
Washington, D.C. Persons wishing to inspect the comments submitted 
should request an appointment at the Treasury Library, 202/622-0990.
    Board: Comments, which should refer to Docket No. R-0888, may be 
mailed to Mr. William W. Wiles, Secretary, Board of Governors of the 
Federal Reserve System, 20th Street and Constitution Avenue, N.W., 
Washington, D.C. 20551. Comments also may be delivered to Room B-2222 
of the Eccles building between 8:45 a.m. and 5:15 p.m. weekdays, or to 
the guard station in the Eccles Building courtyard on 20th Street N.W. 
(between Constitution Avenue and C Street) at any time. Comments may be 
inspected in Room MP-500 of the Martin Building between 9:00 a.m. and 
5:00 p.m. weekdays, except as provided in 12 CFR 261.8 of the Board's 
Rules Regarding Availability of Information.

FOR FURTHER INFORMATION CONTACT:
    Treasury: Roger Weiner, Assistant Director, 202/622-0400; Stephen 
R. Kroll, Legal Counsel, 703/905-3534; or Nina A. Nichols, Attorney-
Advisor, 703/905-3598, FinCEN.
    Board: Louise L. Roseman, Associate Director, 202/452-2789; Gayle 
Brett, Manager, Fedwire Section, 202/452-2934; Division of Reserve Bank 
Operations and Payment Systems; Oliver Ireland, Associate General 
Counsel, 202/452-3625; or Elaine Boutilier, Senior Counsel, 202/452-
2418, Legal Division, Board of Governors of the Federal Reserve System. 
For the hearing impaired only, Telecommunication Device for the Deaf 
(TDD), Dorothea Thompson, 202/452-3544.

SUPPLEMENTARY INFORMATION:

I. Background

    The statute generally referred to as the Bank Secrecy Act (BSA) 
(Pub. L. 91-508, codified at 12 U.S.C. 1829b and 1951-1959, and 31 
U.S.C. 5311-5330) authorizes the Secretary of the Treasury to require 
financial institutions to keep records and file reports that the 
Secretary determines have a high degree of usefulness in criminal, tax, 
or regulatory investigations or proceedings. The authority of the 
Secretary to administer the BSA has been delegated to the Director of 
FinCEN. The BSA was amended by the Annunzio-Wylie Anti-Money Laundering 
Act of 1992 (Pub. L. 102-550), which authorizes the Treasury and the 
Board to prescribe regulations to require maintenance of records 
regarding domestic and international funds transfers. The Treasury and 
the Board are required to promulgate jointly, after consultation with 
state banking supervisors, recordkeeping requirements for international 
funds transfers by depository institutions and nonbank financial 
institutions. The Treasury and the Board are required to consider the 
usefulness of recordkeeping rules for international funds transfers in 
criminal, tax, or regulatory investigations or proceedings and the 
effect of such rules on the cost and efficiency of the payments system. 
The Treasury and the Board are authorized to promulgate regulations for 
domestic funds transfers by depository institutions. The Treasury, but 
not the Board, is authorized to promulgate recordkeeping and reporting 
requirements for domestic funds transfers by nonbank financial 
institutions.
    In January 1995, the Treasury and the Board jointly published 
enhanced recordkeeping requirements related to certain funds transfers 
and transmittals of funds by banks and other financial institutions, in 
accordance with the BSA (60 FR 220, January 3, 1995). At the same time, 
the Treasury adopted a companion rule, known as the travel rule, that 
requires financial institutions to include in transmittal orders 
certain information that must be retained under the joint rule (60 FR 
234, January 3, 1995). The joint rule sets forth definitions of terms 
used in both rules. These rules were scheduled to become effective on 
January 1, 1996.

II. Industry Concerns Regarding Definition of Parties to an 
International Funds Transfer

    Subsequent to adoption of these rules, several large banks as well 
as bank 

[[Page 44147]]
counsel have advised the Treasury and the Board that compliance with 
the joint rule and the travel rule would be complicated if the parties 
to an international funds transfer were defined differently in the 
joint rule than they are in the Uniform Commercial Code Article 4A (UCC 
4A). Under the joint rule adopted in January, the first U.S. bank 
office that handles an incoming international funds transfer is defined 
as the originator's bank.1 Under UCC 4A and the Board's Regulation 
J governing Fedwire transfers (12 CFR Part 210, subpart B), which 
incorporates UCC 4A, if the U.S. bank receives a payment order from a 
foreign bank and executes a corresponding payment order to a subsequent 
receiving bank, the first U.S. bank would be deemed an intermediary 
bank rather than the originator's bank. Large banks that regularly 
process international funds transfers believe that substantial 
confusion would result from defining the parties to an international 
funds transfer for the purposes of the BSA rules differently from the 
manner in which they are defined under UCC 4A.

    \1\  The originator's bank is defined as ``the receiving bank to 
which the payment order of the originator is issued if the 
originator is not a bank, or the originator if the originator is a 
bank.'' (103.11(w)) A receiving bank is defined as ``the bank to 
which the sender's instruction is addressed.'' (103.11(aa)) As the 
definition of bank is limited to an ``agent, agency, branch or 
office within the United States'' (103.11(c)), a receiving bank must 
be a U.S. banking office, and therefore the originator's bank is the 
first U.S. banking office to handle the transfer.
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    In addition to the confusion created by defining the parties to an 
international funds transfer in a manner that is not consistent with 
the roles of the parties as defined by UCC 4A, several banks have 
indicated that they believe the difference between the BSA and the UCC 
4A definitions may cause certain problems in the application of the 
joint rule and the travel rule to international funds transfers. The 
following chart depicts a hypothetical funds transfer that serves to 
illustrate the operational issues raised by the industry 
representatives if the first U.S. bank in an incoming international 
funds transfer were deemed to be the originator's bank and the last 
U.S. bank in an outgoing international funds transfer were deemed to be 
the beneficiary's bank:

----------------------------------------------------------------------------------------------------------------
                                        Definitions of bank and FI                                              
                                    parties to transfer limited to US      Definitions that conform to UCC 4A   
        Parties to transfer             offices (rule published in          meanings (proposed amended rule)    
                                              January 1995)                                                     
----------------------------------------------------------------------------------------------------------------
German Company....................  .................................  Originator/Transmittor.                  
German Bank 1.....................  .................................  Originator's bank/Transmittor's FI.      
German Bank 2.....................  Originator/Transmittor...........  Intermediary bank/Intermediary FI.       
New York Bank 1...................  Originator's bank/Transmittor's    Intermediary bank/Intermediary FI.       
                                     FI.                                                                        
New York Bank 2...................  Intermediary bank/Intermediary's   Intermediary bank/Intermediary FI.       
                                     FI.                                                                        
California Bank...................  Beneficiary's bank/Recipient's FI  Intermediary bank/Intermediary FI.       
Japanese Bank.....................  Beneficiary/Recipient............  Beneficiary's bank/Recipient's FI.       
Japanese Company..................  .................................  Beneficiary/Recipient.                   
----------------------------------------------------------------------------------------------------------------

    In this transfer, a German company instructs its bank (German Bank 
1) to send a dollar payment to Japanese Bank for credit to a Japanese 
company. German Bank 1 forwards the payment instructions to its 
correspondent, German Bank 2. German Bank 2 sends the payment 
instructions via SWIFT to its New York correspondent, New York Bank 1. 
New York Bank 1 executes a payment order via CHIPS to New York Bank 2. 
New York Bank 2 forwards the payment order via Fedwire to California 
Bank. California Bank sends the payment order via SWIFT to Japanese 
Bank, which credits the account of the Japanese company.
III. Definitions Under Joint Rule as Published in January 1995

    Under the joint rule as adopted in January, German Bank 2 is 
defined as the originator (transmittor) of the transfer, because it is 
the sender of the first payment order 2 in a funds transfer and 
New York Bank 1 is defined as the originator's bank (transmittor's 
financial institution). Japanese Bank 1, which is neither a bank nor a 
financial institution under the BSA definitions, is defined as the 
beneficiary and California Bank is defined as the beneficiary's bank. 
In the example, New York Bank 1 as originator's bank would be subject 
to the following requirements under the joint rule:

    \2\ A payment order is defined as ``an instruction of a sender 
to a receiving bank. . . .'' (31 CFR 103.11(y)) As noted above, a 
receiving bank is defined as ``the bank to which the sender's 
instruction is addressed.'' Because the BSA rules limit the 
definition of bank to an office within the United States, the 
instruction of a sender to the first U.S. banking office is defined 
as the first payment order.
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    A. Obtain and retain the name and address of German Bank 2 (the 
originator) (103.33(e)(1)(i)). New York Bank 1 generally would have a 
record of the name and address of German Bank 2, which in virtually all 
cases would be an accountholder at New York Bank 1. In the rare case in 
which German Bank 2 is not an established customer of New York Bank 1, 
New York Bank 1 would be required to obtain this information.
    B. Have the capability to retrieve the record of the funds transfer 
by name or account number of German Bank 2 (103.33(e)(4)). All 
financial institutions are currently subject to the general 
retrievability requirements under section 103.38(d), which states that 
all records required to be retained under 31 CFR Part 103 ``. . . shall 
be filed or stored in such a way as to be accessible within a 
reasonable time, taking into consideration the nature of the record, 
and the amount of time expired since the record was made.'' While the 
requirements of the joint rule emphasize the need for an originator's 
bank to have the capability to retrieve funds transfer records by name 
or account number of the originator, the bank would nonetheless have to 
have the capability to retrieve these records if it were deemed to be 
an intermediary bank.
    C. Comply with the verification requirements if German Bank 2 is 
not an established customer (103.33(e)(2)). If German Bank 2 were not 
an established customer of New York Bank 1 (a situation that would 
occur only rarely), New York Bank 1 would have to comply with the joint 
rule's verification requirements. This would require manual 
intervention in what is generally a highly automated process, and the 
Treasury and the Board do not believe that the resulting information 
would be highly useful to law enforcement.
    In addition, under the travel rule, the originator's bank and each 
intermediary bank (if the information is received from the sender) 
would be required to:
    D. Include the name, address, and account number of German Bank 2 
in the payment order it executes (103.33(g) 

[[Page 44148]]
(1) and (2)). New York Bank 1 typically would include in the payment 
order it executes the SWIFT Bank Identification Code (BIC) or CHIPS 
Universal Identifier (UID) of German Bank 2 (the originator), rather 
than German Bank 2's name, address, and account number. The Treasury 
believes that use of a widely-used industry code, such as a BIC, UID, 
or routing number, to identify the transmittor constitutes compliance 
with the travel rule requirement to include the name, address, and 
account number of the transmittor in subsequent payment orders.
    Information pertaining to German Bank 2 may not be retained in all 
subsequent payment orders, however, because German Bank 2 generally 
would be identified as the instructing bank, rather than the 
originator's bank, in the CHIPS message sent by New York Bank 1. While 
the identification of the bank included in the originator's bank field 
generally is retained in subsequent payment orders, the identification 
of the bank in the instructing bank field may change in subsequent 
payment orders.3

    \3\  Banks often define the parties to an international transfer 
in the SWIFT, CHIPS, and Fedwire formats differently than the 
parties are defined in the BSA rules as adopted in January. These 
formats have fields for the identification of the originator's bank, 
the instructing bank, the sender bank (the bank that sends the 
transfer through SWIFT, CHIPS, or Fedwire), the receiver bank, the 
intermediary bank, and the beneficiary's bank. The first U.S. or 
foreign bank in a transfer is generally identified in the message 
format as the originator's bank; the bank that immediately precedes 
the sender bank (if different than the originator's bank) is 
identified as the instructing bank. For transfers that are sent 
through a large number of receiving banks, the identification of 
instructing bank may change from payment order to payment order.
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    California Bank, as beneficiary's bank, would be required under the 
joint rule to (1) retain the information contained in the payment order 
sent by New York Bank 2 (103.33(e)(1)(iii)); (2) have the capability to 
retrieve the record of the funds transfer by name or account number of 
Japanese Bank (103.33(e)(4)); and (3) comply with the verification 
requirements if Japanese Bank is not an established customer 
(103.33(e)(3)).

IV. Effect of Proposed Amendment

    If New York Bank 1 and California Bank in the example above were 
considered to be intermediary banks instead of the originator's bank 
and beneficiary's bank, respectively, under the BSA rules, they would 
be required under the joint rule to retain a copy of the payment order 
they accept (103.33(e)(1)(ii)). As noted above, while there is no 
specific retrievability requirement under the joint rule for 
intermediary banks, under 103.38(d) information retained must be 
``accessible.'' Under the travel rule, New York Bank 1 would be 
required to include in its payment order to New York Bank 2 only the 
information pertaining to the transmittor and other transfer 
information that it received from German Bank 2 (103.33(g)(2)). 
Similarly, New York Bank 2 and California Bank, as other intermediary 
banks in the funds transfer, would be required to include this 
information in the payment orders they execute if received in the 
payment orders they accepted.
    Treatment of New York Bank 1 and California Bank as intermediary 
banks addresses the concerns of industry representatives. Under current 
industry practice, banks generally would be in compliance with the 
recordkeeping, retrievability, and travel rule requirements for 
intermediary banks. The Treasury and the Board do not believe that 
identifying the banks in an international transfer in the same manner 
as they are defined in UCC 4A will reduce the usefulness of the 
information to law enforcement, provided that intermediary banks comply 
with the requirements of 103.38(d). As part of the 36-month review of 
the effectiveness of the joint rule and the travel rule, Treasury will 
monitor the experience of law enforcement in obtaining from 
intermediary banks information retained pursuant to the joint rule.
V. Corresponding Changes Affecting Nonbank Financial Institutions

    The example reviewed above involves banks, as banks have raised 
concerns with the differences between the definitions of the parties to 
international funds transfers in the joint rule and UCC 4A. Financial 
institutions other than banks have not raised operational concerns with 
the Treasury and the Board on this matter. The Treasury and the Board 
believe, however, that nonbank financial institutions that conduct 
international transmittals of funds may have similar compliance 
concerns. Accordingly, the proposed amendments to the joint rule 
include modifications that correspond to the changes that apply to 
banks.

VI. Request for Comment

    The Treasury and the Board request comment on proposed amendments 
to the definitions that make the roles of the parties to an 
international funds transfer consistent under the BSA rules and under 
UCC 4A and that make parallel changes to the definitions of the parties 
to an international transmittal of funds. The proposed amendments 
include expansion of the definitions of beneficiary's bank, 
originator's bank, payment order, receiving bank, receiving financial 
institution, recipient's financial institution, transmittal order, 
transmittor, and transmittor's financial institution to include both 
domestic and foreign institutions. The Treasury and the Board have also 
proposed technical conforming changes to the joint rule to clarify that 
only bank and financial institution offices located within the United 
States are subject to the joint rule's requirements.
    These amendments should reduce confusion with respect to the 
interpretation of the rules and should facilitate compliance with the 
rules' requirements. Moreover, the Treasury and the Board do not 
believe that these proposed amendments will increase the cost of 
compliance with the rules' requirements for those banks and nonbank 
financial institutions that have prepared to comply with the rules 
under the assumption that the first U.S. banking office in an 
international transfer is subject to the originator's bank 
responsibilities.
    In addition, the Treasury and the Board have revised section 
103.33(e)(6) by deleting the word ``domestic'' prior to the word 
``bank'' and prior to the words ``broker or dealer in securities.'' 
These changes have no material effect on the scope of the exclusions 
set forth in this section as the word ``bank'' is defined to be limited 
to offices located within the United States and the term ``broker or 
dealer in securities'' is limited to brokers registered with the 
Securities and Exchange Commission.4

    \4\ The Treasury has also proposed companion amendments to the 
travel rule. See document elsewhere in today's Federal Register.
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VII. Paperwork Reduction Act

    The collection of information required by the joint final rule 
whose amendment is proposed in this notice was submitted by the 
Treasury to the Office of Management and Budget in accordance with the 
requirements of the Paperwork Reduction Act (44 U.S.C. 3504(h)) under 
control number 1505-0063. (See, 60 FR 227 (January 3, 1995)) The 
collection is authorized, as before, by 12 U.S.C. 1829b and 1959 and 31 
U.S.C. 5311-5330.
    The changes to the joint final rule proposed in this document will 
eliminate information collection requirements that were required by the 
joint final rule. Therefore, no additional Paperwork Reduction Act 
submissions are required. 

[[Page 44149]]


VIII. Regulatory Flexibility Act

    Pursuant to section 605(b) of the Regulatory Flexibility Act (5 
U.S.C. 605(b)), the Treasury and the Board hereby certify that these 
proposed amendments to the joint final rule will not have a significant 
economic impact on a substantial number of small entities. The proposed 
amendments eliminate uncertainty as to the application of the joint 
final rule and reduce the cost of complying with the joint rule's 
requirements. Furthermore, the proposed amendments affect international 
funds transfers and transmittals of funds, which are handled almost 
exclusively by large institutions. Accordingly, a regulatory 
flexibility analysis is not required.

IX. Executive Order 12866

    The Treasury finds that these proposed amendments to the joint rule 
are not ``significant'' for purposes of Executive Order 12866. The 
modifications should reduce the cost of compliance with the joint rule 
and the travel rule. The Treasury believes that these proposed rule 
changes 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. These proposed revisions create no 
inconsistencies with, nor do they interfere with actions taken or 
planned by other agencies. Finally, these proposed revisions raise no 
novel legal or policy issues. A cost and benefit analysis therefore is 
not required.

X. Unfunded Mandates Reform Act of 1995 Statement

    Section 202 of the Unfunded Mandates Reform Act of 1995, Public Law 
104-4 (Unfunded Mandates Act), signed into law on March 22, 1995, 
requires that an agency prepare a budgetary impact statement before 
promulgating a rule that includes a federal mandate that may result in 
expenditure by state, local, and tribal governments, in the aggregate, 
or by the private sector, of $100 million or more in any one year. The 
Treasury has determined that it is not required to prepare a written 
budgetary impact statement for the proposed amendments, and has 
concluded that the proposed amendments are the most cost-effective and 
least burdensome means of achieving the stated objectives of the rule.

List of Subjects in 31 CFR Part 103

    Administrative practice and procedure, Banks, banking, Brokers, 
Currency, Foreign banking, foreign currencies, Gambling, 
Investigations, Penalties, Reporting and recordkeeping requirements, 
Securities.

Amendment

    For the reasons set forth in the preamble, 31 CFR Part 103 is 
proposed to be 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: 12 U.S.C. 1829b and 1951-1959; 31 U.S.C. 5311-5330.

    2. Section 103.11 is amended by revising paragraphs (e), (w), (y) 
introductory text, (aa), (bb), (dd), (kk) introductory text, (ll), and 
(mm) to read as follows:


Sec. 103.11  Meaning of terms.

* * * * *
    (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.
* * * * *
    (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.
* * * * *
    (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, in a fixed or determinable amount 
of money to a beneficiary if:
* * * * *
    (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.
* * * * *
    (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.
* * * * *
    (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:
* * * * *
    (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.
* * * * *
    3. In Sec. 103.33, paragraphs (e) introductory text, (e)(1)(i) 
introductory text, (e)(1)(ii), (e)(1)(iii), (e)(6)(i)(A) through 
(e)(6)(i)(G), (e)(6)(ii), (f) introductory text, (f)(1)(i) introductory 
text, (f)(1)(ii), (f)(1)(iii), (f)(6)(i)(A) through (f)(6)(i)(G) and 
(f)(6)(ii) are revised to read as follows:


Sec. 103.33  Records to be made and retained by financial institutions.

* * * * *
    (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:
* * * * *
    (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. 

[[Page 44150]]

    (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.
* * * * *
    (6) Exceptions. * * *
    (i) * * *
    (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) The United States;
    (F) A state or local government; or
    (G) 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:
* * * * *
    (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.
* * * * *
    (6) Exceptions. * * *
    (i) * * *
    (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) The United States;
    (F) A state or local government; or
    (G) 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.
    In concurrence:

    By the Board of Governors of the Federal Reserve System, August 
17, 1995.
William W. Wiles,
Secretary to the Board.

    Dated: July 31, 1995.

    By the Department of the Treasury.
Stanley E. Morris,
Director, Financial Crimes Enforcement Network.
[FR Doc. 95-20842 Filed 8-23-95; 8:45 am]
BILLING CODE 6210-01-P; 4820-03-P