[Federal Register Volume 61, Number 225 (Wednesday, November 20, 1996)]
[Rules and Regulations]
[Pages 58974-58975]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-29638]


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FEDERAL RESERVE SYSTEM

12 CFR Part 219

[Regulation S; Docket No. R-0934]


Reimbursement for Providing Financial Records; Recordkeeping 
Requirements for Certain Financial Records

AGENCY: Board of Governors of the Federal Reserve System.

ACTION: Final rule.

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SUMMARY: The Board has approved an amendment to subpart B of its 
Regulation S. Subpart B cross-references the substantive provisions of 
a joint rule adopted by the Board and the Department of the Treasury 
relating to the recordkeeping requirements for funds transfers and 
transmittals of funds under the Bank Secrecy Act. The amendment 
clarifies that Regulation S does not apply to any person or transaction 
or class of persons or transactions that the Treasury has exempted from 
the joint rule.

EFFECTIVE DATE: December 20, 1996.

FOR FURTHER INFORMATION CONTACT: Louise Roseman, Associate Director, 
(202/452-2789), 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. For 
the hearing impaired only, contact Dorothea Thompson, 
Telecommunications Device for the Deaf (TDD) (202/452-3544).

SUPPLEMENTARY INFORMATION: The Bank Secrecy Act,1 as amended by 
the Annunzio-Wylie Anti-Money Laundering Act of 1992,2 authorizes, 
and in some cases requires, the Secretary of the Treasury 3 and 
the

[[Page 58975]]

Board to prescribe recordkeeping rules for domestic and international 
funds transfers and money transmittals. The Board and the Treasury 
issued a joint rule,4 effective May 28, 1996, that sets forth 
recordkeeping and reporting requirements for funds transfers and money 
transmittals by banks and nonbank financial institutions. These 
requirements are intended to assist in the investigation and 
prosecution of money-laundering activities. In promulgating these 
rules, the Board and the Treasury determined that the requirements 
would have a high degree of usefulness in criminal, tax, or regulatory 
investigations or proceedings. The substance of the joint rule is 
codified with the Treasury's Bank Secrecy Act regulations in 31 CFR 
part 103.5 At the same time, the Board added subpart B to its 
Regulation S (12 CFR part 219) to cross-reference the joint rule.
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    \1\ Pub. L. 91-508, codified at 12 U.S.C. 1829b and 1951-1959, 
and 31 U.S.C. 5311-5329.
    \2\ Pub. L. 102-550, title XV.
    \3\ The Secretary of the Treasury has delegated the authority to 
administer the Bank Secrecy Act to the Director of the Financial 
Crimes Enforcement Network.
    \4\ 60 FR 231 (January 3, 1995), as modified by 60 FR 44144 
(August 24, 1995) and 61 FR 14382 (April 1, 1996).
    \5\ 31 CFR 103.11 and 103.33 (e) and (f).
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    Under its general Bank Secrecy Act regulations, the Treasury may 
make exceptions or grant exemptions from the requirements in 31 CFR 
part 103 for particular persons or classes of persons or particular 
transactions or classes of transactions.6 The Board has no similar 
exemptive provisions in Regulation S. The Board recognizes the 
possibility that the Treasury could grant an exception or exemption for 
a person or transaction subject to the joint rule. Therefore, on August 
21, 1996 (61 FR 43195), the Board requested comments on an amendment to 
clarify that subpart B does not apply to a particular person or class 
of persons, or particular transaction or class of transactions, to the 
extent that the Treasury has determined that the joint rule does not 
apply to that person, transaction, or class of persons or transactions.
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    \6\ See 31 CFR 103.45.
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    Four comments, all favorable, were received in response to the 
proposed change. Three comments were received from Federal Reserve 
Banks, all of which supported the proposed amendment to clarify the 
intent of subpart B of Regulation S. One comment was received from a 
bank trade association, which supported the amendment, stating that 
``any revisions that eliminate potential confusion help to alleviate 
regulatory burden.'' That comment did suggest that the final language 
be revised and put into clearer language--less ``legalese.'' The 
language used in the amendment to subpart B adopts the terminology used 
in the exemption authority given the Secretary of the Treasury in 31 
CFR 103.45; and, to avoid confusion, the Board will continue to use the 
same terminology.
    Accordingly, to avoid confusion and to ensure consistent 
application of the joint rule and subpart B of Regulation S, the Board 
has amended Regulation S to clarify that subpart B does not apply to a 
particular person or class of persons or particular transaction or 
class of transactions to the extent that the Treasury has determined 
that the joint rule does not apply to that person, transaction, or 
class of persons or transactions.

Regulatory Flexibility Analysis

    Pursuant to the Regulatory Flexibility Act (5 U.S.C. 605(b)), the 
Board hereby certifies that this amendment to subpart B of Regulation S 
will not have a significant economic impact on a substantial number of 
small entities. The amendment eliminates uncertainty as to the 
application of the joint final rule and may result in reduced 
compliance burden to the extent that the Treasury exempts persons or 
transactions that would otherwise be subject to Regulation S. 
Accordingly, a regulatory flexibility analysis is not required.

Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
Ch. 3506; 5 CFR 1320 Appendix A.1), the Board reviewed the rule under 
the authority delegated to the Board by the Office of Management and 
Budget. No collections of information pursuant to the Paperwork 
Reduction Act are contained in the final rule.

List of Subjects in 12 CFR Part 219

    Banks, Banking, Currency, Foreign banking, Reporting and 
recordkeeping requirements.
    For the reasons set out in the preamble, 12 CFR part 219 is amended 
as set forth below.

PART 219--REIMBURSEMENT FOR PROVIDING FINANCIAL RECORDS; 
RECORDKEEPING REQUIREMENTS FOR CERTAIN FINANCIAL RECORDS 
(REGULATION S)

* * * * *

Subpart B--Recordkeeping and Reporting Requirements for Funds 
Transfers and Transmittals of Funds

    1. The authority citation for subpart B is revised to read as 
follows:

    Authority: 12 U.S.C. 1829b(b)(2) and (3).

    2. In Sec. 219.21, the first word ``Such'' in the last sentence is 
revised to read ``These'' and a new sentence is added immediately 
preceding the last sentence to read as follows:


Sec. 219.21.  Authority, purpose, and scope.

    * * * This subpart does not apply to a particular person or class 
of persons or a particular transaction or class of transactions to the 
extent that the Treasury has determined that 31 CFR 103.33(e) or (f) do 
not apply to that person, transaction, or class of persons or 
transactions. * * *

    By order of the Board of Governors of the Federal Reserve 
System, November 14, 1996.
William W. Wiles,
Secretary of the Board.
[FR Doc. 96-29638 Filed 11-19-96; 8:45 am]
BILLING CODE 6210-01-P