[Federal Register Volume 75, Number 206 (Tuesday, October 26, 2010)]
[Rules and Regulations]
[Pages 65806-65879]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-25914]



[[Page 65805]]

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Part III





Department of the Treasury





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Financial Crimes Enforcement Network



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31 CFR Part 103

31 CFR Chapter X



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Transfer and Reorganization of Bank Secrecy Act Regulations; Final Rule

  Federal Register / Vol. 75 , No. 206 / Tuesday, October 26, 2010 / 
Rules and Regulations  

[[Page 65806]]


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DEPARTMENT OF THE TREASURY

Financial Crimes Enforcement Network

31 CFR Part 103

31 CFR Chapter X

RIN 1506-AA92


Transfer and Reorganization of Bank Secrecy Act Regulations

AGENCY: Financial Crimes Enforcement Network (FinCEN), Department of 
the Treasury.

ACTION: Final rule.

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SUMMARY: FinCEN is issuing this final rule to move the Bank Secrecy Act 
(BSA) regulations to a new chapter in the Code of Federal Regulations 
(CFR). The new chapter contains the BSA regulations, which are 
generally reorganized by financial industry. Moving the BSA regulations 
to a new chapter and organizing the chapter by financial industry 
creates a user-friendly way to find regulations applicable to a 
particular financial industry. This new organization within the new 
chapter also allows for the renumbering of the BSA regulations in a 
manner that makes it easier to find regulatory requirements than under 
the numbering system currently used in the existing regulations. FinCEN 
also makes minor technical changes to the BSA regulations such as 
updating mailing addresses and points of contact.

DATES: Effective Date: March 1, 2011.

FOR FURTHER INFORMATION CONTACT: Regulatory Policy and Programs 
Division, FinCEN (800) 949-2732 and select option 6.

SUPPLEMENTARY INFORMATION:

I. Background

    On November 7, 2008, FinCEN published a proposal to transfer and 
reorganize its regulations as part of an ongoing effort to increase the 
efficiency and effectiveness of its regulatory oversight.\1\ Moving the 
regulations to a new chapter within Title 31 provides FinCEN with the 
opportunity to restructure its regulations so that they can readily be 
identified as being specific to a particular regulated industry or as 
being generally applicable to all regulated industries or covered 
persons. FinCEN received eight public comments on the Chapter X NPRM, 
which will be discussed below in the Section-by-Section Analysis.
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    \1\ See 73 FR 66414 (November 7, 2008) (Transfer and 
Reorganization of Bank Secrecy Act Regulations) (referred to herein 
as the ``Chapter X NPRM'').
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    Making the regulatory obligations more clear in their structure and 
more readily accessible to regulated institutions facilitates 
compliance and thereby advances the purposes of the BSA. Additionally, 
the transfer of FinCEN's regulations allows for better integration with 
the government-wide eRulemaking program.
    Since publication of the Chapter X NPRM, FinCEN has further 
improved public access to its rulemaking and non-rulemaking documents. 
On November 17, 2009, FinCEN issued a Final Rule amending the 
procedures for publicly issuing an administrative ruling relating to 
the BSA.\2\ Since the effective date of that Final Rule (December 17, 
2009), FinCEN posts administrative rulings with precedential value on 
its Web site, rather than publishing them in the Federal Register. 
FinCEN believes that posting administrative rulings with precedential 
value on FinCEN's Web site will make those rulings easier to find. All 
administrative rulings with precedential value will be available by 
mail to any person who makes a written request that specifically 
identifies the administrative ruling that is sought.
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    \2\ See 74 FR 59096 (November 17, 2009) (Final Rule for amending 
the Bank Secrecy Act Regulations Administrative Ruling System) 
(hereinafter, the ``Administrative Ruling Final Rule'').
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    Subsequent to the publication of the Chapter X NPRM, FinCEN 
published several final rules, e.g., the Administrative Ruling Final 
Rule. All final rules that were published in the timeframe between the 
Chapter X NPRM and this Final Rule have been incorporated into FinCEN's 
regulations in the Chapter X format.

II. Effective Date

    The effective date of this Final Rule will be March 1, 2011.

III. Section-by-Section Analysis

A. Technical Corrections

    In the Chapter X NPRM, FinCEN proposed to make non-substantive 
technical corrections to the BSA implementing regulations. These 
corrections included updating titles and offices to represent 
organizational changes within the Treasury Department and FinCEN, 
changing mailing addresses, and updating names of Federal government 
agencies. The comments that FinCEN received relating to the technical 
corrections were comments or suggestions that would substantively alter 
the BSA. Because such comments are outside the scope of this 
rulemaking, FinCEN did not make any changes on the basis of those 
comments.
    On April 14, 2010, FinCEN issued a final rule to include mutual 
funds within the general definition of ``financial institution'' in the 
BSA regulations.\3\ In that rule, FinCEN finalized two definitions of 
the term ``mutual fund,'' one for the general definition section and 
the other for the anti-money laundering program rules for mutual 
funds.\4\ Although the two definitions contain minor textual 
differences, they were not intended to and do not have substantive 
distinctions. Similarly, there are textual differences between those 
two definitions and the definition of mutual fund used for the 
regulations implementing the Customer Identification Program 
requirements for mutual funds. Again, the textual differences were not 
intended to and do not signify substantive distinctions. Therefore, in 
order to be consistent and eliminate the textual anomalies within the 
various definitions for mutual fund that are currently within Part 103, 
the text of the definition of mutual fund from the Part 103 Customer 
Identification Programs for Mutual Funds will now be used as the 
definition of mutual fund in Chapter X for all purposes, except as 
provided in the regulatory text for the special measures provisions of 
Subpart F of the General Provisions Part.
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    \3\ See 75 FR 19241 (April 14, 2010) (Final Rule defining Mutual 
Funds as Financial Institutions).
    \4\ See Id.
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B. Restructuring and Numbering Logic

    As discussed in the Chapter X NPRM, FinCEN is restructuring its 
regulations to make them more accessible for covered individuals and 
financial institutions. Chapter X is comprised of a General Provisions 
Part and separate financial institution specific Parts for those 
financial institutions subject to FinCEN regulations. The General 
Provisions Part (Part 1010) contains regulatory requirements that apply 
to more than one type of financial institution, and in some cases, 
individuals. The financial institution specific Parts contain 
regulatory requirements specific to a particular type of financial 
institution. Each Part, whether general or specific, contains similarly 
titled and ordered Subparts. For consistency across all Parts and to 
facilitate ease of reference, FinCEN has renumbered its regulations so 
that the same numbering format is used for the regulations in each 
Subpart.

[[Page 65807]]

    The comments received by FinCEN were generally supportive of 
FinCEN's effort to organize the BSA implementing regulations into an 
easier to follow format. Some commenters noted that the renumbering 
format could serve to minimize any misunderstanding regarding whether a 
particular industry has a specific regulatory requirement.
    One commenter noted the structure of Chapter X is problematic 
because users would be required to refer to both the industry-specific 
Part, as well as the General Provisions Part to determine regulatory 
requirements. Some commenters noted that a potential problem with the 
structure of Chapter X and the location of the definitions is that it 
would require users to flip back and forth between Parts to confirm 
both the definitions and requirements. While there will be some cross-
referencing between Parts for financial institutions, FinCEN concluded 
that the structure of Chapter X is best for identifying the current 
regulatory requirements for each type of financial institution and any 
future regulatory changes.
    Some commenters requested that all definitions be placed in the 
General Provisions Part, thus limiting the need for cross-referencing. 
FinCEN considered this suggestion while drafting this Final Rule but 
ultimately found the approach unworkable because it created large sub-
categories of definitions that diluted the contextual distinction that 
applies to certain defined terms. For example, the definition for 
``account,'' as one commenter noted, has several different meanings. 
The reason for these definitional differences lies not only with the 
products and services the covered institution offers, but also with the 
specific regulatory obligations involved. Placing all definitions of 
``account'' in the General Definitions Subpart of Part 1010, as 
requested by the commenter, would require several sub-definitions to 
reference the applicable regulations. So in the case of the term 
``account,'' by removing ``account'' from the definition section in the 
rules implementing Section 312 of the USA PATRIOT Act and placing them 
in the General Definitions Subpart of Part 1010, the needed context as 
to why the definition is different is lost. While there may be some 
cross-referencing of definitions with the implementation of Chapter X, 
keeping the definitional structure as proposed helps provide context as 
to why words are defined differently.
    Many of the comments FinCEN received on the Chapter X NPRM were 
substantive in nature or suggested changes that would alter industry 
regulatory requirements. One commenter suggested removing dates in the 
regulations that were perceived as no longer relevant, such as the 
dates in the Civil Penalties provisions of the previous 31 CFR 103.57. 
While some dates in the regulations appear to be so long-standing as to 
be obsolete, they still represent substantive differences in compliance 
obligations and corresponding penalties. All comments to the Chapter X 
NPRM that requested a substantive change, or would result in a 
substantive change, are considered outside the scope of this rulemaking 
and have not been incorporated into this Final Rule.

C. Removal of Appendices to 31 CFR Part 103

    In the Chapter X NPRM, FinCEN did not publish the Appendices in 31 
CFR Part 103. In the preamble to the Chapter X NPRM, FinCEN proposed to 
publish those Appendices that would be transferred to Chapter X in a 
subsequent notice of proposed rulemaking. After a further review of the 
Appendices, FinCEN determined that it was not necessary to issue a 
second notice of proposed rulemaking for the Appendices located in 31 
CFR Part 103. This is because, as described in more detail below, 
FinCEN has determined that none of the Appendices will need to be 
included in Chapter X; instead, the material contained in the 
Appendices that is still required by the regulations will be made 
available on FinCEN's Web site. The following is a description of the 
disposition of each 31 CFR Part 103 Appendix:
Appendix A to 31 CFR Part 103
    As part of the Administrative Ruling Final Rule, certain 
administrative rulings contained in Appendix A to 31 CFR Part 103 
(proposed as Appendix D to Chapter X) have been posted on FinCEN's Web 
site and others were formally rescinded.\5\ As stated in the preamble 
to the Administrative Ruling Final Rule, some of the administrative 
rulings included in Appendix A to 31 CFR Part 103 remain FinCEN's 
interpretation of the applicable rules and maintain their precedential 
value; therefore, those rulings have been posted to the FinCEN Web 
site. Because FinCEN has chosen to post administrative rulings on its 
public Web site, FinCEN will not be publishing the proposed Appendix D 
to Chapter X in this Final Rule. In the Administrative Ruling Final 
Rule, FinCEN did not indicate whether Administrative Ruling 88-2 would 
be posted on the FinCEN public Web site or rescinded. Administrative 
Ruling 88-2 has been posted on the FinCEN public Web site. The 
disposition of this particular ruling was inadvertently omitted from 
the Administrative Ruling Final Rule.
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    \5\ See 74 FR 59096, 59097 (November 17, 2009). See also http://www.fincen.gov/statutes_regs/rulings/.
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Appendix B to 31 CFR Part 103
    The requirement for a financial institution to provide FinCEN with 
the certification currently found in Appendix B to 31 CFR Part 103 
(Certification for Purposes of Section 314(b) of the USA PATRIOT Act 
and 31 CFR 103.110) prior to sharing information under 31 CFR 103.110 
(new 31 CFR 1010.540) was replaced in September 2002 with a requirement 
to provide notice to FinCEN prior to such information sharing.\6\ 
Although the certification requirement was replaced with a notice 
requirement, the Certification contained at Appendix B to 31 CFR Part 
103 was not removed from the CFR. FinCEN's removal of the Certification 
in this Final Rule is a technical correction, rather than a substantive 
change. The Certification contained at Appendix B to 31 CFR Part 103 
will not be transferred to Chapter X and the Certification will not be 
made available on FinCEN's public Web site. As indicated above, 
financial institutions providing notice to FinCEN prior to sharing 
information under new 31 CFR 1010.540 shall continue to do so using the 
notice that is currently provided on FinCEN's public Web site.\7\
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    \6\ See 67 FR 60579, 60580 (September 26, 2002) (Final Rule for 
Special Information Sharing Procedures to Deter Money Laundering and 
Terrorist Activity).
    \7\ See http://www.fincen.gov/statutes_regs/patriot/section314b.html.
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Appendix C to 31 CFR Part 103
    For similar reasons, FinCEN is removing Appendix C to 31 CFR Part 
103 (proposed Appendix E to Chapter X). The interpretative guidance 
contained within Appendix C to 31 CFR Part 103 are posted on FinCEN's 
public Web site and will not be published in the CFR.\8\
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    \8\ See http://www.fincen.gov/statutes_regs/guidance/2000_2004.html.
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Appendix A to Subpart H of 31 CFR Part 103
    Appendix A to Subpart H of 31 CFR Part 103 contains the Notice for 
Purposes of Subsection 314(b) of the USA Patriot Act and 31 CFR 
103.110. This Notice is currently available on the FinCEN public Web 
site and will not be published in the Code of Federal Regulations as 
part of Chapter X.

[[Page 65808]]

Financial institutions that are required to provide notice to FinCEN 
for purposes of the new 31 CFR 1010.540 can access the notice via the 
FinCEN Web site. This notice will be made available by mail to any 
financial institution that specifically requests a paper copy of the 
notice.
Appendix A and Appendix B to Subpart I of 31 CFR Part 103
    FinCEN is also removing Appendix A to Subpart I of 31 CFR Part 103 
and Appendix B to Subpart I of 31 CFR Part 103.\9\ The forms contained 
in Appendix A to Subpart I of 31 CFR Part 103 and Appendix B to Subpart 
I of 31 CFR Part 103 will be provided to the public via FinCEN's Web 
site in a manner that will be more easily accessible and usable than 
being printed in the CFR.
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    \9\ Appendix A to Subpart I of 31 CFR Part 103 (proposed as 
Appendix B to Chapter X) is the Certification Regarding 
Correspondent Accounts. Appendix B to Subpart I of 31 CFR Part 103 
(proposed as Appendix C to Chapter X) is the Recertification 
Regarding Correspondent Accounts for Foreign Banks. These Appendices 
will not appear in Chapter X.
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D. Chapter X Distribution Table

    For convenience, FinCEN is providing a table summarizing the 
distribution of the 31 CFR Part 103 provisions to the final layout of 
Chapter X as follows:

                           Distribution Table
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                                         31 CFR Parts 1000-1099 (Chapter
        31 CFR Part 103 Section                     X) Section
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103.11.................................  1010.100.
103.12.................................  1010.301.
103.15(a)-(g)..........................  1024.320(a)-(g).
103.16(a)..............................  Deleted.
103.16(b)-(i)..........................  1025.320(a)-(h).
103.17(a)-(h)..........................  1026.320(a)-(h).
103.18(a)-(f)..........................  1020.320(a)-(f).
103.19(a)-(h)..........................  1023.320(a)-(h).
103.20(a)-(f)..........................  1022.320(a)-(f).
103.21(a)-(g)..........................  1021.320(a)-(g).
103.22(a)..............................  Deleted.
103.22(b)(1)...........................  1010.311.
103.22(b)(2)(i)-(iii)..................  1021.311(a)-(c).
103.22(c)(1)&(2).......................  1010.313(a)&(b).
103.22(c)(3)...........................  1021.313.
103.22(d)(1) Sentences 1 and 3.........  1020.315(a).
103.22(d)(1) Sentence 2................  1010.315.
103.22(d)(2)-(9).......................  1020.315(b)-(i).
103.23(a)-(d)..........................  1010.340(a)-(d).
103.24.................................  1010.350.
103.25(a)-(e)..........................  1010.360(a)-(e).
103.26(a)-(d)..........................  1010.370(a)-(d).
103.27(a)(1)...........................  1010.306(a)(1).
103.27(a)(2)...........................  Deleted.
103.27(a)(3)&(4).......................  1010.306(a)(2)&(3).
103.27(b)-(e)..........................  1010.306(b)-(e).
103.28.................................  1010.312.
103.29(a)-(c)..........................  1010.415(a)-(c).
103.30(a)-(c)..........................  1010.330(a)-(c).
103.30(d)(1)(i)-(iv)...................  1021.330(a)-(d).
103.30(d)(2)...........................  1010.330(d)(2).
103.30(d)(3)...........................  1010.330(d)(1).
103.30(e)..............................  1010.330(e).
103.31.................................  1010.401.
103.32.................................  1010.420.
103.33(a)-(d)..........................  1010.410(a)-(d).
103.33(e)..............................  1020.410(a).
103.33(f)&(g)..........................  1010.410(e)&(f).
103.34(a)&(b)..........................  1020.410(b)&(c).
103.35(a)&(b)..........................  1023.410(a)&(b).
103.36(a)-(c)..........................  1021.410(a)-(c).
103.37(a)-(c)..........................  1022.410(a)-(c).
103.38(a)-(d)..........................  1010.430(a)-(d).
103.39.................................  1010.440.
103.41(a)-(f)..........................  1022.380(a)-(f).
103.51.................................  1010.980.
103.52(a)&(b)..........................  1010.940(a)&(b).
103.53(a)-(f)..........................  1010.950(a)-(f).
103.54.................................  1010.960.
103.55(a)-(c)..........................  1010.970(a)-(c).
103.56(a)-(g)..........................  1010.810(a)-(g).
103.57(a)-(h)..........................  1010.820(a)-(h).
103.58.................................  1010.830.
103.59(a)-(d)..........................  1010.840(a)-(d).
103.60(a)-(c)..........................  1010.850(a)-(c).
103.61.................................  1010.920.
103.62(a)-(c)..........................  1010.930(a)-(c).

[[Page 65809]]

 
103.63(a)-(c)..........................  1010.314(a)-(c).
103.64(a)..............................  1021.210(b).
103.64(b)(1)...........................  1021.100(a).
103.64(b)(2)...........................  1021.100(b).
103.64(b)(3)...........................  1021.100(c).
103.64(b)(4)...........................  1021.100(d).
103.64(b)(5)...........................  1021.100(e).
103.71.................................  1010.911.
103.72(a)-(c)..........................  1010.912(a)-(c).
103.73(a)&(b)..........................  1010.913(a)&(b).
103.74(a)-(c)..........................  1010.914(a)-(c).
103.75(a)-(c)..........................  1010.915(a)-(c).
103.76.................................  1010.916.
103.77.................................  1010.917.
103.80.................................  1010.710.
103.81(a)-(e)..........................  1010.711(a)-(e).
103.82.................................  1010.712.
103.83(a)&(b)..........................  1010.713(a)&(b).
103.84.................................  1010.714.
103.85.................................  1010.715.
103.86(a)-(d)..........................  1010.716(a)-(d).
103.87(a)&(b)..........................  1010.717(a)&(b).
103.90(a)..............................  1010.505(b).
103.90(b)..............................  1010.505(c).
103.90(c)..............................  1010.505(a).
103.90(d)..............................  1010.505(d).
103.100(a)(1)..........................  Deleted.
103.100(a)(2)..........................  1010.520(a)(1).
103.100(a)(3)..........................  Deleted.
103.100(a)(4)..........................  1010.520(a)(2).
103.100(b).............................  1010.520(b).
103.110(a)(1)..........................  Deleted.
103.110(a)(2)&(3)......................  1010.540(a)(1)&(2).
103.110(b)-(d).........................  1010.540(b)-(d).
103.120(a)(1)..........................  1020.100(d)(1).
                                         1023.100(e)(1).
103.120(a)(2)..........................  1010.100(r).
103.120(a)(3)..........................  1010.100(tt).
103.120(a)(4)..........................  Deleted.
103.120(b).............................  1020.210.
103.120(c)(1)&(2)......................  1023.210(a)&(b).
                                         1026.210(b)(1)&(2).
103.120(d).............................  1021.210(a).
103.121(a)(1)..........................  1020.100(a).
103.121(a)(2)..........................  1020.100(b).
103.121(a)(3)..........................  1020.100(c).
103.121(a)(4)..........................  Deleted.
103.121(a)(5)..........................  1020.100(d)(2).
103.121(a)(6)..........................  1010.100(yy).
103.121(a)(7)..........................  1010.100(iii).
103.121(a)(8)..........................  1010.100(iii).
103.121(b)-(d).........................  1020.220(a)-(c).
103.122(a)(1)..........................  1023.100(a).
103.122(a)(2)..........................  1023.100(b).
103.122(a)(3)..........................  1023.100(c).
103.122(a)(4)..........................  1023.100(d).
103.122(a)(5)..........................  Deleted.
103.122(a)(6)..........................  1023.100(e).
103.122(a)(7)..........................  Deleted.
103.122(a)(8)..........................  Deleted.
103.122(a)(9)..........................  Deleted.
103.122(b)-(d).........................  1023.220(a)-(c).
103.123(a)(1)..........................  1026.100(a).
103.123(a)(2)..........................  Deleted.
103.123(a)(3)..........................  1026.100(b).
103.123(a)(4)..........................  1026.100(c).
103.123(a)(5)..........................  1026.100(d).
103.123(a)(6)..........................  Deleted.
103.123(a)(7)..........................  1026.100(e).
103.123(a)(8)..........................  1026.100(f).
103.123(a)(9)..........................  1026.100(g).
103.123(a)(10).........................  1026.100(h).

[[Page 65810]]

 
103.123(a)(11).........................  Deleted.
103.123(a)(12).........................  Deleted.
103.123(a)(13).........................  Deleted.
103.123(b)-(d).........................  1026.220(a)-(c).
103.125(a)-(e).........................  1022.210(a)-(e).
103.130(a).............................  Deleted.
103.130(b)&(c).........................  1024.210(a)&(b).
103.131(a)(1)..........................  1024.100(a).
103.131(a)(2)..........................  1024.100(c).
103.131(a)(3)..........................  1010.100(r).
103.131(a)(4)..........................  1024.100(d).
103.131(a)(5)..........................  1010.100(gg).
103.131(a)(6)..........................  1010.100(iii).
103.131(a)(7)..........................  1010.100(yy).
103.131(a)(8)..........................  1010.100(iii).
103.131(b)-(d).........................  1024.220(a)-(c).
103.135(a)(1)..........................  1028.100(e).
103.135(a)(2)..........................  1028.100(d).
103.135(a)(3)..........................  1028.100(a).
103.135(a)(4)..........................  1028.100(f).
103.135(a)(5)..........................  1028.100(b).
103.135(a)(6)..........................  1028.100(c).
103.135(b)&(c).........................  1028.210(a)&(b).
103.137(a)(1)..........................  1025.100(a).
103.137(a)(2)..........................  Deleted.
103.137(a)(3)..........................  Deleted.
103.137(a)(4)..........................  1025.100(b).
103.137(a)(5)..........................  1025.100(c).
103.137(a)(6)..........................  1025.100(d).
103.137(a)(7)..........................  1025.100(e).
103.137(a)(8)..........................  1025.100(f).
103.137(a)(9)..........................  1025.100(g).
103.137(a)(10).........................  1025.100(h).
103.137(a)(11).........................  Deleted.
103.137(a)(12).........................  Deleted.
103.137(b)-(e).........................  1025.210(a)-(d).
103.140(a)(1)..........................  1027.100(a).
103.140(a)(2)..........................  1027.100(b).
103.140(a)(3)..........................  1027.100(c).
103.140(a)(4)..........................  1027.100(d).
103.140(a)(5)..........................  1027.100(e).
103.140(a)(6)..........................  Deleted.
103.140(a)(7)..........................  1027.100(f).
103.140(b)-(d).........................  1027.210(a)-(c).
103.170(a)-(d).........................  1010.205(a)-(d).
103.175(a).............................  1010.100(c).
103.175(b).............................  1010.605(a).
103.175(c).............................  1010.605(b).
103.175(d).............................  1010.605(c).
103.175(e).............................  1010.605(d).
103.175(f).............................  1010.605(e).
103.175(g).............................  Deleted.
103.175(h).............................  1010.605(f).
103.175(i).............................  1010.605(g).
103.175(j).............................  1010.605(h).
103.175(k).............................  1010.605(i).
103.175(l).............................  1010.605(j).
103.175(m).............................  1010.605(k).
103.175(n).............................  1010.605(l).
103.175(o).............................  1010.605(m).
103.175(p).............................  1010.605(n).
103.175(q).............................  1010.605(o).
103.175(r).............................  1010.605(p).
103.175(s).............................  Deleted.
103.175(t).............................  Deleted.
103.176(a)-(g).........................  1010.610(a)-(g).
103.177(a)-(f).........................  1010.630(a)-(f).
103.178(a)-(e).........................  1010.620(a)-(e).
103.185(a)-(f).........................  1010.670(a)-(f).
103.186(a)(1)..........................  1010.651(a)(2).
103.186(a)(2)..........................  1010.651(a)(3).
103.186(a)(3)..........................  1010.651(a)(1).

[[Page 65811]]

 
103.186(b).............................  1010.651(b).
103.187(a)(1)..........................  1010.652(a)(2).
103.187(a)(2)..........................  1010.652(a)(3).
103.187(a)(3)..........................  1010.652(a)(4).
103.187(a)(4)..........................  1010.652(a)(1).
103.187(b).............................  1010.652(b).
103.188(a)(1)..........................  1010.653(a)(1).
103.188(a)(2)..........................  1010.653(a)(2).
103.188(a)(3)..........................  1010.653(a)(3).
103.188(a)(4)..........................  1010.653(a)(4).
103.188(b).............................  1010.653(b).
103.192(a)(1)..........................  1010.654(a)(1).
103.192(a)(2)..........................  1010.654(a)(2).
103.192(a)(3)..........................  1010.654(a)(3).
103.192(a)(4)..........................  1010.654(a)(4).
103.192(b).............................  1010.654(b).
103.193(a)(1)..........................  1010.655(a)(1).
103.193(a)(2)..........................  1010.655(a)(2).
103.193(a)(3)..........................  1010.655(a)(3).
103.193(a)(4)..........................  1010.655(a)(4).
103.193(b).............................  1010.655(b).
Appendix A to Subpart H................  Deleted. Notice is available on
                                          FinCEN's public Web site.
Appendix A to Subpart I................  Deleted. Certification will be
                                          available on the FinCEN public
                                          Web site.
Appendix B to Subpart I................  Deleted. Re-certification will
                                          be available on the FinCEN
                                          public Web site.
Appendix A to Part 103.................  Deleted. Administrative Rulings
                                          with precedential value have
                                          been posted on the FinCEN
                                          public Web site.
Appendix B to Part 103.................  Deleted. Certification will no
                                          longer be available.
Appendix C to Part 103.................  Deleted. Interpretive guidance
                                          will be posted on the FinCEN
                                          public Web site.
------------------------------------------------------------------------

IV. Regulatory Matters

A. Executive Order 12866

    It has been determined that this rulemaking is not a significant 
regulatory action for purposes of Executive Order 12866. Accordingly, a 
regulatory impact analysis is not required.

B. Unfunded Mandates Reform Act of 1995

    Section 202 of the Unfunded Mandates Reform Act of 1995 (``Unfunded 
Mandates Act''), Public Law 104-4 (March 22, 1995), requires that an 
agency prepare a budgetary impact statement before promulgating a rule 
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. If a budgetary impact statement is required, section 202 
of the Unfunded Mandates Act also requires an agency to identify and 
consider a reasonable number of regulatory alternatives before 
promulgating a rule. FinCEN has determined that it is not required to 
prepare a written statement under Section 202 and has concluded that on 
balance the rule provides the most cost-effective and least burdensome 
alternative to achieve the objectives of the rule.

C. Regulatory Flexibility Act

    Pursuant to the Regulatory Flexibility Act (RFA) (5 U.S.C. 602 et 
seq.), FinCEN certifies that this final regulation likely will not have 
a significant economic impact on a substantial number of small 
entities. The regulatory changes in this final rule merely restructure 
and re-codify existing regulations and do not alter current regulatory 
obligations.
    FinCEN believes the costs that may arise as a result of 
restructuring these regulations will be confined to training, 
publication and computer programming. The new regulatory structure will 
require financial institution compliance personnel to be retrained to 
assure familiarity with the new numbering format but does not require 
changes to program, recordkeeping, or reporting requirements. FinCEN 
has attempted to mitigate any substantial costs of retraining by 
providing a Distribution Table.
    Publication costs incurred to reproduce informational materials 
supplied by financial institutions to customers and the public should 
be minimized by the time interval afforded between the proposed rule, 
analysis and publication of this final rule.
    FinCEN's analysis of the small entities that are subject to this 
regulation indicates that the vast majority of such entities file paper 
reports with FinCEN. These entities should incur no additional filing 
costs because they will continue to obtain the most current copy of the 
form available on the FinCEN Web site to file a report. For financial 
institutions that file electronically using computer programs, the 
citation to Chapter X should not have an effect on completion of the 
required fields contained in FinCEN forms. As an example, FinCEN's Form 
104, the Currency Transaction Report, will require the same completion 
of each field in the same order. While the underlying regulatory 
citations may be changing, the completion of FinCEN forms will not.

D. Paperwork Reduction Act

    This regulation contains no new information collection requirements 
subject to review and approval by the Office of Management and Budget 
under the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d) et seq.). 
The information collection requirements for the Bank Secrecy Act, 
currently codified at 31 CFR Part 103, were previously approved by the 
Office of Management and Budget under OMB Control numbers 1506-0001 
through 1506-0046. Under the Paperwork Reduction Act, an agency may not 
conduct or sponsor and a person is not required to respond to a 
collection of information

[[Page 65812]]

unless it displays a valid OMB control number.

List of Subjects in 31 CFR Part 103 and 31 CFR Parts 1010 and 1020 
Through 1028

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

Department of the Treasury

 31 CFR Chapter I

Authority and Issuance

0
For the reasons set forth above, under the authority of 12 U.S.C. 1829b 
and 1951-1959; 31 U.S.C. 5311-5314, 5316-5332; title III, sec. 314, 
Pub. L. 107-56, 115 Stat. 307, Part 103 of Title 31 of the Code of 
Federal Regulations is removed.

Department of the Treasury

Financial Crimes Enforcement Network

31 CFR Chapter X

Authority and Issuance

0
For the reasons set forth above, Chapter X, consisting of parts 1000 
through 1099, is added to Title 31 to read as follows:

CHAPTER X--FINANCIAL CRIMES ENFORCEMENT NETWORK, DEPARTMENT OF THE 
TREASURY

PARTS 1000-1009 [RESERVED]

PART 1010--GENERAL PROVISIONS

Subpart A--General Definitions
Sec.
1010.100 General definitions.
Subpart B--Programs
1010.200 General.
1010.205 Exempted anti-money laundering programs for certain 
financial institutions.
1010.210 Anti-money laundering programs.
1010.220 Customer identification program requirements.
Subpart C--Reports Required To Be Made
1010.300 General.
1010.301 Determination by the Secretary.
1010.305 [Reserved]
1010.306 Filing of reports.
1010.310 Reports of transactions in currency.
1010.311 Filing obligations for reports of transactions in currency.
1010.312 Identification required.
1010.313 Aggregation.
1010.314 Structured transactions.
1010.315 Exemptions for non-bank financial institutions.
1010.320 Reports of suspicious transactions.
1010.330 Reports relating to currency in excess of $10,000 received 
in a trade or business.
1010.340 Reports of transportation of currency or monetary 
instruments.
1010.350 Reports of foreign financial accounts.
1010.360 Reports of transactions with foreign financial agencies.
1010.370 Reports of certain domestic coin and currency transactions.
Subpart D--Records Required To Be Maintained
1010.400 General.
1010.401 Determination by the Secretary.
1010.405 [Reserved]
1010.410 Records to be made and retained by financial institutions.
1010.415 Purchases of bank checks and drafts, cashier's checks, 
money orders and traveler's checks.
1010.420 Records to be made and retained by persons having financial 
interests in foreign financial accounts.
1010.430 Nature of records and retention period.
1010.440 Person outside the United States.
Subpart E--Special Information Sharing Procedures To Deter Money 
Laundering and Terrorist Activity
1010.500 General.
1010.505 Definitions.
1010.520 Information sharing between government agencies and 
financial institutions.
1010.530 [Reserved]
1010.540 Voluntary information sharing among financial institutions.
Subpart F--Special Standards of Diligence; Prohibitions; and Special 
Measures
1010.600 General.

Special Due Diligence for Correspondent Accounts and Private Banking 
Accounts

1010.605 Definitions.
1010.610 Due diligence programs for correspondent accounts for 
foreign financial institutions.
1010.620 Due diligence programs for private banking accounts.
1010.630 Prohibition on correspondent accounts for foreign shell 
banks; records concerning owners of foreign banks and agents for 
service of legal process.
1010.640 [Reserved]

Special Measures Under Section 311 of the USA Patriot Act and Law 
Enforcement Access to Foreign Bank Records

1010.651 Special measures against Burma.
1010.652 Special measures against Myanmar Mayflower Bank and Asia 
Wealth Bank.
1010.653 Special measures against Commercial Bank of Syria.
1010.654 Special measures against VEF Bank.
1010.655 Special measures against Banco Delta Asia.
1010.670 Summons or subpoena of foreign bank records; Termination of 
correspondent relationship.
Subpart G--Administrative Rulings
1010.710 Scope.
1010.711 Submitting requests.
1010.712 Nonconforming requests.
1010.713 Oral communications.
1010.714 Withdrawing requests.
1010.715 Issuing rulings.
1010.716 Modifying or rescinding rulings.
1010.717 Disclosing information.
Subpart H--Enforcement; Penalties; and Forfeiture
1010.810 Enforcement.
1010.820 Civil penalty.
1010.830 Forfeiture of currency or monetary instruments.
1010.840 Criminal penalty.
1010.850 Enforcement authority with respect to transportation of 
currency or monetary instruments.
Subpart I--Summons
1010.911 General.
1010.912 Persons who may issue summons.
1010.913 Contents of summons.
1010.914 Service of summons.
1010.915 Examination of witnesses and records.
1010.916 Enforcement of summons.
1010.917 Payment of expenses.
Subpart J--Miscellaneous
1010.920 Access to records.
1010.930 Rewards for informants.
1010.940 Photographic or other reproductions of Government 
obligations.
1010.950 Availability of information.
1010.960 Disclosure.
1010.970 Exceptions, exemptions, and reports.
1010.980 Dollars as including foreign currency.

    Authority: 12 U.S.C. 1829b and 1951-1959; 31 U.S.C. 5311-5314, 
5316-5332; title III, sec. 314, Pub. L. 107-56, 115 Stat. 307.

Subpart A--General Definitions


Sec.  1010.100  General definitions.

    When used in this chapter and in forms prescribed under this 
chapter, where not otherwise distinctly expressed or manifestly 
incompatible with the intent thereof, terms shall have the meanings 
ascribed in this subpart. Terms applicable to a particular type of 
financial institution or specific part or subpart of this chapter are 
located in that part or subpart. Terms may have different meanings in 
different parts or subparts.
    (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.  1010.340 of this part, a 
person who

[[Page 65813]]

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.  1010.340, on one or more days.
    (c) Attorney General. The Attorney General of the United States.
    (d) 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 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).
    (e) Bank Secrecy Act. The Currency and Foreign Transactions 
Reporting Act, its amendments, and the other statutes relating to the 
subject matter of that Act, have come to be referred to as the Bank 
Secrecy Act. These statutes are codified at 12 U.S.C. 1829b, 12 U.S.C. 
1951-1959, 18 U.S.C. 1956, 18 U.S.C. 1957, 18 U.S.C. 1960, and 31 
U.S.C. 5311-5314 and 5316-5332 and notes thereto.
    (f) Beneficiary. The person to be paid by the beneficiary's bank.
    (g) 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.
    (h) 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.
    (i) Business day. As used in this chapter with respect to banks, 
business day means that day, as normally communicated to its depository 
customers, on which a bank routinely posts a particular transaction to 
its customer's account.
    (j) 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).
    (k) 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.
    (l) 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).
    (m) 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.
    (n) Deposit account. Deposit accounts include transaction accounts 
described in paragraph (ccc) of this section, savings accounts, and 
other time deposits.
    (o) 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.
    (p) 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.
    (q) 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.
    (r) Federal functional regulator.
    (1) The Board of Governors of the Federal Reserve System;
    (2) The Office of the Comptroller of the Currency;
    (3) The Board of Directors of the Federal Deposit Insurance 
Corporation;
    (4) The Office of Thrift Supervision;
    (5) The National Credit Union Administration;
    (6) The Securities and Exchange Commission; or
    (7) The Commodity Futures Trading Commission.
    (s) FinCEN. FinCEN means the Financial Crimes Enforcement Network, 
a bureau of the Department of the Treasury.
    (t) 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 (ff) 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 Indian lands); and has gross annual gaming revenue in 
excess of $1 million. The

[[Page 65814]]

term includes the principal headquarters and every domestic branch or 
place of business of the casino.
    (ii) For purposes of this paragraph (t)(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 chapter 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 chapter prior to the time in its current 
business year that its gross annual gaming revenue exceeds $1,000,000.
    (iii) Any reference in this chapter, other than in this paragraph 
(t)(5) and in paragraph (t)(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 chapter shall include a reference 
to ``card club'' to the extent provided in paragraph (t)(5)(iii) of 
this section.
    (ii) For purposes of this paragraph (t)(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 chapter 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 
chapter 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; or
    (10) A mutual fund.
    (u) 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.
    (v) 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.
    (w) 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 automated 
clearinghouse, an automated teller machine, or a point-of-sale system, 
are excluded from this definition.
    (x) 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).
    (y) 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.
    (z) Intermediary bank. A receiving bank other than the originator's 
bank or the beneficiary's bank.
    (aa) 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.
    (bb) 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).
    (cc) 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.
    (dd) 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.  1010.340), 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.
    (ee) [Reserved]
    (ff) 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 (ff)(1) through (ff)(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

[[Page 65815]]

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 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 circumstance: Limitation. Whether a person ``engages 
as a business'' in the activities described in paragraph (ff)(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 (ff)(5)(i) of this section.
    (6) U.S. Postal Service. The United States Postal Service, except 
with respect to the sale of postage or philatelic products.
    (gg) Mutual fund. 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).
    (hh) Option on a commodity. Any agreement, contract, or transaction 
described in section 1a(26) of the CEA, 7 U.S.C. 1a(26).
    (ii) Originator. The sender of the first payment order in a funds 
transfer.
    (jj) 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.
    (kk) 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.
    (ll) 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.
    (mm) 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.
    (nn) Receiving bank. The bank or foreign bank to which the sender's 
instruction is addressed.
    (oo) 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.
    (pp) Recipient. The person to be paid by the recipient's financial 
institution. The term recipient includes a beneficiary, except where 
the recipient's financial institution is a financial institution other 
than a bank.
    (qq) 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.
    (rr) Secretary. The Secretary of the Treasury or any person duly 
authorized by the Secretary to perform the function mentioned.
    (ss) 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).
    (tt) Self-regulatory organization:
    (1) 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
    (2) 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).
    (uu) Sender. The person giving the instruction to the receiving 
financial institution.
    (vv) State. The States of the United States and, wherever necessary 
to carry out the provisions of this chapter, the District of Columbia.
    (ww) 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.
    (xx) Structure (structuring). For purposes of Sec.  1010.314, 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

[[Page 65816]]

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 Sec. Sec.  1010.311, 1010.313, 
1020.315, 1021.311 and 1021.313 of this chapter. ``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 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.
    (yy) Taxpayer Identification Number. Taxpayer Identification Number 
(``TIN'') 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).
    (zz) 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.
    (aaa) [Reserved]
    (bbb) Transaction. (1) Except as provided in paragraph (bbb)(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. Sec.  1010.311, 1010.313, 1020.315, 
1021.311, 1021.313, and other provisions of this chapter relating 
solely to the report required by those sections, 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.
    (ccc) 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.
    (ddd) 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.
    (eee) 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.
    (fff) 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.
    (ggg) 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.
    (hhh) 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.
    (iii) U.S. person. (1) A United States citizen; or (2) 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. Non-U.S. person means a person that is not a U.S. 
person.
    (jjj) U.S. Postal Service. The United States Postal Service, except 
with respect to the sale of postage or philatelic products.

Subpart B--Programs


Sec.  1010.200  General.

    Each financial institution (as defined in 31 U.S.C. 5312(a)(2) or 
(c)(1)) should refer to Subpart B of its Chapter X Part for any 
additional program requirements. Unless otherwise indicated, the 
program requirements contained in this Subpart B apply to all financial 
institutions (as defined in 31 U.S.C. 5312(a)(2) or (c)(1)).


Sec.  1010.205  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;

[[Page 65817]]

    (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.  1010.100(d)) that is not subject 
to regulation by a Federal functional regulator (as defined in Sec.  
1010.100(r)) 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.  1010.100(t)(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 paragraph 
(b) of this section shall not apply to any financial institution that 
is otherwise required to establish an anti-money laundering program by 
this chapter.
    (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 chapter.


Sec.  1010.210  Anti-money laundering programs.

    Each financial institution (as defined in 31 U.S.C. 5312(a)(2) or 
(c)(1)) should refer to Subpart B of its Chapter X Part for any 
additional anti-money laundering program requirements.


Sec.  1010.220  Customer identification program requirements.

    Each financial institution (as defined in 31 U.S.C. 5312(a)(2) or 
(c)(1)) should refer to Subpart B of its Chapter X Part for any 
additional customer identification program requirements.

Subpart C--Reports Required To Be Made


Sec.  1010.300  General.

    Each financial institution (as defined in 31 U.S.C. 5312(a)(2) or 
(c)(1)) should refer to its Chapter X Part for any additional reporting 
requirements. Unless otherwise indicated, the reporting requirements 
contained in this Subpart C apply to all financial institutions.


Sec.  1010.301  Determination by the Secretary.

    The Secretary hereby determines that the reports required by this 
chapter have a high degree of usefulness in criminal, tax, or 
regulatory investigations or proceedings.


Sec.  1010.305  [Reserved]


Sec.  1010.306  Filing of reports.

    (a)(1) A report required by Sec.  1010.311 or Sec.  1021.311, shall 
be filed by the financial institution within 15 days following the day 
on which the reportable transaction occurred.
    (2) A copy of each report filed pursuant to Sec. Sec.  1010.311, 
1010.313, 1020.315, 1021.311 and 1021.313, shall be retained by the 
financial institution for a period of five years from the date of the 
report.
    (3) All reports required to be filed by Sec. Sec.  1010.311, 
1010.313, 1020.315, 1021.311 and 1021.313, shall be filed with the 
Commissioner of Internal Revenue, unless otherwise specified.
    (b)(1) A report required by Sec.  1010.340(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 and Border Protection.
    (2) A report required by Sec.  1010.340(b) shall be filed within 15 
days after receipt of the currency or other monetary instruments.
    (3) All reports required by Sec.  1010.340 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 and Border 
Protection. Reports required by Sec.  1010.340(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.  1010.340(b) may also be filed by mail. Reports filed by mail 
shall be addressed to the Commissioner of Customs and Border 
Protection, Attention: Currency Transportation Reports, Washington, DC 
20229.
    (c) Reports required to be filed by Sec.  1010.350 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.  1010.311, Sec.  1010.313, Sec.  
1010.340, Sec.  1010.350, Sec.  1020.315, Sec.  1021.311 or Sec.  
1021.313 of this chapter 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.  
1010.311, Sec.  1010.313, Sec.  1010.350, Sec.  1020.315, Sec.  
1021.311 or Sec.  1021.313 of this chapter may be obtained from the 
Internal Revenue Service. Forms to be used in making the reports 
required by Sec.  1010.340 may be obtained from the U.S. Customs and 
Border Protection.


Sec.  1010.310  Reports of transactions in currency.

    Sections 1010.310 through 1010.314 set forth the rules for the 
reporting by financial institutions of transactions in currency. Unless 
otherwise indicated, the transactions in currency reporting 
requirements in Sec. Sec.  1010.310 through 1010.314 apply to all 
financial institutions. Each financial institution should refer to 
Subpart C of its Chapter X Part for any additional transactions in 
currency reporting requirements.


Sec.  1010.311  Filing obligations for reports of transactions in 
currency.

    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 U.S. 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.


Sec.  1010.312  Identification required.

    Before concluding any transaction with respect to which a report is 
required under Sec.  1010.311, Sec.  1010.313, Sec.  1020.315, Sec.  
1021.311 or Sec.  1021.313 of this chapter, 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 driver's license or credit card). A bank 
signature card may

[[Page 65818]]

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.


Sec.  1010.313  Aggregation.

    (a) 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 domestic offices, for purposes of the transactions in 
currency reporting requirements in this chapter.
    (b) Multiple transactions. In the case of financial institutions 
other than casinos, for purposes of the transactions in currency 
reporting requirements in this chapter, 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 U.S. 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.


Sec.  1010.314  Structured transactions.

    No person shall for the purpose of evading the transactions in 
currency reporting requirements of this chapter with respect to such 
transaction:
    (a) Cause or attempt to cause a domestic financial institution to 
fail to file a report required under the transactions in currency 
reporting requirements of this chapter;
    (b) Cause or attempt to cause a domestic financial institution to 
file a report required under the transactions in currency reporting 
requirements of this chapter that contains a material omission or 
misstatement of fact; or
    (c) Structure (as that term is defined in Sec.  1010.100(xx)) or 
assist in structuring, or attempt to structure or assist in 
structuring, any transaction with one or more domestic financial 
institutions.


Sec.  1010.315  Exemptions for non-bank financial institutions.

    A non-bank financial institution is not required to file a report 
otherwise required by Sec.  1010.311 with respect to a transaction in 
currency between the institution and a commercial bank.


Sec.  1010.320  Reports of suspicious transactions.

    Each financial institution (as defined in 31 U.S.C. 5312(a)(2) or 
(c)(1)) should refer to subpart C of its financial institution part in 
this Chapter for any additional suspicious transaction reporting 
requirements.


Sec.  1010.330  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. Sec.  
1010.311, 1010.313, 1020.315, 1021.311 or 1021.313 of this chapter.
    (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 requires persons 
to report similar information about certain transactions to FinCEN. 
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 TIN 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

[[Page 65819]]

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 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 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

[[Page 65820]]

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 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:

    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 is made with respect to a foreign currency transaction--(i) In 
general. Generally, there is no requirement to report with respect to a 
currency transaction if the entire transaction occurs outside the 
United States (the fifty states and the District of Columbia).

[[Page 65821]]

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)(1)(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)(1)(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.

    (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.
    (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.


Sec.  1010.340  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 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.


Sec.  1010.350  Reports of foreign financial accounts.

    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

[[Page 65822]]

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.


Sec.  1010.360  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. Sec.  
1010.410 and 1020.410.
    (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.
    (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 chapter.
    (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 the requirements of 
this chapter, or any other provision of state or Federal law, or 
otherwise maintained in the regular course of business.


Sec.  1010.370  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

[[Page 65823]]

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 
chapter and to prevent persons from evading the reporting/recordkeeping 
requirements of this chapter, 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.  1020.315 of this chapter 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.

Subpart D--Records Required To Be Maintained


Sec.  1010.400  General.

    Each financial institution (as defined in 31 U.S.C. 5312(a)(2) or 
(c)(1)) should refer to its Chapter X Part for any additional 
recordkeeping requirements. Unless otherwise indicated, the 
recordkeeping requirements contained in this Subpart D apply to all 
financial institutions.


Sec.  1010.401  Determination by the Secretary.

    The Secretary hereby determines that the records required to be 
kept by this chapter have a high degree of usefulness in criminal, tax, 
or regulatory investigations or proceedings.


Sec.  1010.405  [Reserved]


Sec.  1010.410  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.  1010.370(a), not 
to exceed five years.
    (e) 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 (e) 
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: \1\
---------------------------------------------------------------------------

    \1\ 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.

[[Page 65824]]

    (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 (e)(1)(i) of this section:
    (i) If the transmittal order is made in person, prior to acceptance 
the transmittor's financial institution 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 of 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 of 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 of 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 (e)(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 (e)(1)(i) and (e)(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 
(e)(1)(iii) and (e)(3) of 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 
(e)(2) and (e)(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; 
or
    (J) A mutual fund; 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

[[Page 65825]]

financial institution are the same broker or dealer in securities.
    (f) 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 (f):
    (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: \2\
---------------------------------------------------------------------------

    \2\ 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.
    (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: \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.
    (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 (f)(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 (f)(1)(iii) through (v), and the information specified in 
paragraph (f)(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 (f)(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 (f)(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 (f)(2)(iii) through (f)(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 (f)(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, 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 (f)(3)(i)(B) or (f)(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 (f) shall not 
apply to transmittals of funds that are listed in paragraph (e)(6) of 
this section or Sec.  1020.410(a)(6) of this chapter.


Sec.  1010.415  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

[[Page 65826]]

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.


Sec.  1010.420  Records to be made and retained by persons having 
financial interests in foreign financial accounts.

    Records of accounts required by Sec.  1010.350 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 a Federal income tax return, and ending with 
the date on which final disposition is made of the criminal proceeding.


Sec.  1010.430  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 chapter 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 chapter, 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 chapter 
shall be retained for a period of five years. Records or reports 
required to be kept pursuant to an order issued under Sec.  1010.370 of 
this chapter 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.


Sec.  1010.440  Person outside the United States.

    For the purposes of this chapter, 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 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.

Subpart E--Special Information Sharing Procedures To Deter Money 
Laundering and Terrorist Activity


Sec.  1010.500  General.

    Sections 1010.505 through 1010.540 of this Subpart E were issued 
pursuant to the requirements of section 314 of the USA PATRIOT Act. 
Each financial institution (as defined in 31 U.S.C. 5312(a)(2) or 
(c)(1)) should refer to its Chapter X Part for any additional special 
information sharing procedures.


Sec.  1010.505  Definitions.

    For purposes of this Subpart E, the following definitions apply:
    (a) Account means a formal banking or business relationship 
established to provide regular services, dealings, and 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.
    (b) Money laundering means an activity criminalized by 18 U.S.C. 
1956 or 1957, or an activity that would be criminalized by 18 U.S.C. 
1956 or 1957 if it occurred in the United States.
    (c) Terrorist activity means an act of domestic terrorism or 
international terrorism as those terms are defined in 18 U.S.C. 2331.
    (d) Transaction. (1) Except as provided in paragraph (d)(2) of this 
section, the term ``transaction'' shall

[[Page 65827]]

have the same meaning as provided in Sec.  1010.100(bbb).
    (2) For purposes of Sec.  1010.520, a transaction shall not mean 
any transaction conducted through an account.


Sec.  1010.520  Information sharing between government agencies and 
financial institutions.

    (a) Definitions. For purposes of this section:
    (1) Financial institution means any financial institution described 
in 31 U.S.C. 5312(a)(2).
    (2) Law enforcement agency means a Federal, State, local, or 
foreign law enforcement agency with criminal investigative authority, 
provided that in the case of a foreign law enforcement agency, such 
agency is from a jurisdiction that is a party to a treaty that 
provides, or in the determination of FinCEN is from a jurisdiction that 
otherwise allows, law enforcement agencies in the United States 
reciprocal access to information comparable to that obtained under this 
section.
    (b) Information requests based on credible evidence concerning 
terrorist activity or money laundering--(1) In general. A 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 
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 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 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) Requests from FinCEN. FinCEN may solicit, on its own behalf and 
on behalf of appropriate components of the Department of the Treasury, 
whether a financial institution or a group of financial institutions 
maintains or has maintained accounts for, or has engaged in 
transactions with, any specified individual, entity, or organization. 
Before an information request under this section is made to a financial 
institution, FinCEN or the appropriate Treasury component shall certify 
in writing in the same manner as a requesting law enforcement agency 
that each individual, entity or organization about which FinCEN or the 
appropriate Treasury component is seeking information is engaged in, or 
is reasonably suspected based on credible evidence of engaging in, 
terrorist activity or money laundering. The certification also must 
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 FinCEN or the appropriate Treasury component who can be 
contacted with any questions relating to its request.
    (3) 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 law enforcement agency, FinCEN or 
requesting Treasury component representative, or U.S. law enforcement 
attach[eacute] in the case of a request by a foreign law enforcement 
agency, which has been 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.  1010.505(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 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 chapter.
    (B)(1) A financial institution shall not disclose to any person, 
other than FinCEN or the requesting Treasury component, the law 
enforcement agency on whose behalf FinCEN is requesting information, or 
U.S. law enforcement attach[eacute] in the case of a request by a 
foreign law enforcement agency, which has been named in the information 
request, 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.

[[Page 65828]]

    (2) Notwithstanding paragraph (b)(3)(iv)(B)(1) of this section, a 
financial institution authorized to share information under Sec.  
1010.540 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)(3)(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.
    (4) 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)(3)(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)).
    (5) No effect on law enforcement or regulatory investigations. 
Nothing in this subpart affects the authority of a Federal, State, or 
local law enforcement agency or officer, or FinCEN or another component 
of the Department of the Treasury, to obtain information directly from 
a financial institution.


Sec.  1010.530  [Reserved]


Sec.  1010.540  Voluntary information sharing among financial 
institutions.

    (a) Definitions. For purposes of this section:
    (1) Financial institution. (i) Except as provided in paragraph 
(a)(1)(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 chapter to establish and maintain an anti-money 
laundering program, or is treated under this chapter 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.
    (2) Association of financial institutions means a group or 
organization the membership of which is comprised entirely of financial 
institutions as defined in paragraph (a)(1) 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 on FinCEN's Internet Web site, http://www.fincen.gov. 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.fincen.gov., 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, 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 chapter.
    (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 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

[[Page 65829]]

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 chapter 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 this 
chapter 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.

Subpart F--Special Standards of Diligence; Prohibitions; and 
Special Measures


Sec.  1010.600   General.

    Each financial institution (as defined in 31 U.S.C. 5312(a)(2) or 
(c)(1)) should refer to its Chapter X Part for any additional special 
standards of diligence; prohibitions; and special measures 
requirements.

Special Due Diligence for Correspondent Accounts and Private Banking 
Accounts


Sec.  1010.605  Definitions.

    Except as otherwise provided, the following definitions apply for 
purposes of Sec. Sec.  1010.610 through 1010.630 and Sec.  1010.670:
    (a) 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 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.
    (b) Certification and recertification mean the certification and 
recertification forms regarding correspondent accounts for foreign 
banks located on FinCEN's Internet Web site, http://www.fincen.gov.
    (c) Correspondent account. (1) The term correspondent account 
means:
    (i) For purposes of Sec.  1010.610(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.  1010.610(b) and (c), 1010.630 and 
1010.670, 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 (e)(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 (e)(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 (e)(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 
(e)(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.
    (d) Correspondent relationship has the same meaning as 
correspondent account for purposes of Sec. Sec.  1010.630 and 1010.670.
    (e) Covered financial institution means: (1) For purposes of Sec.  
1010.610 and 1010.620:
    (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;
    (2) For purposes of Sec. Sec.  1010.630 and 1010.670:

[[Page 65830]]

    (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.
    (f) 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 (e)(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 (e)(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 (f)(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.
    (g) Foreign shell bank means a foreign bank without a physical 
presence in any country.
    (h) 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 (h), 
the definition of person in Sec.  1010.100(mm) does not apply, 
notwithstanding paragraph (k) of this section.
    (i) 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.
    (j) 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 or to select 
directors (or individuals exercising similar functions).
    (k) Person has the meaning provided in Sec.  1010.100(mm).
    (l) 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.
    (m) 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.
    (n) 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.
    (o) Secretary means the Secretary of the Treasury.
    (p) 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.

[[Page 65831]]

Sec.  1010.610  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 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 chapter. 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 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.  
1010.605(j)(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

[[Page 65832]]

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.  1010.605(e)(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.  1010.605(e)(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) 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.  1010.605(e)(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.  
1010.605(e)(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.  1010.100(t) 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 chapter.


Sec.  1010.620  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 chapter.
    (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 
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.  1010.605(e)(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.  1010.605(e)(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.  1010.100(t) is exempt from the 
requirements of 31 U.S.C. 5318(i)(3) pertaining to private banking 
accounts.

[[Page 65833]]

    (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 chapter.


Sec.  1010.630  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 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

[[Page 65834]]

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 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.


Sec.  1010.640  [Reserved]

Special Measures Under Section 311 of the USA Patriot Act and Law 
Enforcement Access to Foreign Bank Records


Sec.  1010.651  Special measures against Burma.

    (a) Definitions. For purposes of this section:
    (1) Burmese banking institution means any foreign bank, as that 
term is defined in Sec.  1010.100(u), chartered or licensed by Burma, 
including branches and offices located outside Burma.
    (2) Correspondent account has the same meaning as provided in Sec.  
1010.605(c).
    (3) Covered financial institution has the same meaning as provided 
in Sec.  1010.605(e)(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.
    (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.


Sec.  1010.652  Special measures against Myanmar Mayflower Bank and 
Asia Wealth Bank.

    (a) Definitions. For purposes of this section:
    (1) Asia Wealth Bank means all headquarters, branches, and offices 
of Asia Wealth Bank operating in Burma or in any jurisdiction.
    (2) Correspondent account has the same meaning as provided in Sec.  
1010.605(c).
    (3) Covered financial institution has the same meaning as provided 
in Sec.  1010.605(e)(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.
    (4) Myanmar Mayflower Bank means all headquarters, branches, and 
offices of Myanmar Mayflower Bank operating in Burma or in any 
jurisdiction.
    (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, 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.


Sec.  1010.653  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

[[Page 65835]]

Syria or in any other jurisdiction, including Syrian Lebanese 
Commercial Bank.
    (2) Correspondent account has the same meaning as provided in Sec.  
1010.605(c)(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 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.


Sec.  1010.654  Special measures against VEF Bank.

    (a) Definitions. For purposes of this section:
    (1) Correspondent account has the same meaning as provided in Sec.  
1010.605(c)(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 registered, or is required to register with 
the 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 
l[imacr]zings, 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

[[Page 65836]]

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.


Sec.  1010.655  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.  
1010.605(c)(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 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 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.


Sec.  1010.670  Summons or subpoena of foreign bank records; 
Termination of correspondent relationship.

    (a) Definitions. The definitions in Sec.  1010.605 apply to this 
section.
    (b) Issuance to foreign banks. The Secretary or the Attorney 
General may issue a summons or subpoena to any

[[Page 65837]]

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.  1010.630, 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.

Subpart G--Administrative Rulings


Sec.  1010.710  Scope.

    This subpart provides that the Director, FinCEN, or his designee, 
either unilaterally or upon request, may issue administrative rulings 
interpreting the application of this chapter.


Sec.  1010.711  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 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, Financial Crimes 
Enforcement Network, P.O. Box 39, Vienna, VA 22183.
    (e) The requester shall advise the Director, FinCEN, 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.


Sec.  1010.712  Nonconforming requests.

    The Director, FinCEN, or his designee shall notify the requester if 
the ruling request does not conform with the requirements of Sec.  
1010.711. 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 FinCEN, shall be treated as 
though it were withdrawn.


Sec.  1010.713  Oral communications.

    (a) The Director of FinCEN or his designee will not issue 
administrative rulings in response to oral requests. Oral opinions or 
advice by Treasury, Customs and Border Protection, 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 chapter, do not bind FinCEN and carry no 
precedential value.
    (b) A person who has made a ruling request in conformity with Sec.  
1010.711 may request an opportunity for oral discussion of the issues 
presented in the request. The request should be made to the Director, 
FinCEN, 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.  
1010.711 before they may be considered in connection with the request.


Sec.  1010.714  Withdrawing requests.

    A person may withdraw a request for an administrative ruling at any 
time before the ruling has been issued.


Sec.  1010.715  Issuing rulings.

    The Director, FinCEN, or his designee may issue a written ruling 
interpreting the relationship between this chapter and each situation 
for which such a ruling has been requested in conformity with Sec.  
1010.711. A ruling issued under this section shall bind FinCEN 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 FinCEN makes it available to the public through publication on the 
FinCEN Web site under the heading ``Administrative rulings'' or other 
appropriate forum. All rulings with precedential value will be 
available by mail to any person upon written request specifically 
identifying the ruling sought. FinCEN will make every effort to respond 
to each requestor within 90 days of receiving a request.


[[Page 65838]]



(Approved by the Office of Management and Budget under control number 
1506-0009)


Sec.  1010.716  Modifying or rescinding rulings.

    (a) The Director, FinCEN, or his designee may modify or rescind any 
ruling made pursuant to Sec.  1010.715:
    (1) When, in light of changes in the statute or regulations, the 
ruling no longer sets forth the interpretation of the Director, FinCEN 
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 Director, FinCEN a written request 
that an administrative ruling be modified or rescinded. The request 
should conform to the requirements of Sec.  1010.711, 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) FinCEN 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 Director, FinCEN, 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 FinCEN 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.


Sec.  1010.717  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.

Subpart H--Enforcement; Penalties; and Forfeiture


Sec.  1010.810  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 chapter, is 
delegated to the Director, FinCEN.
    (b) Authority to examine institutions to determine compliance with 
the requirements of this chapter 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 and Border Protection with 
respect to Sec. Sec.  1010.340 and 1010.830;
    (8) To the Commissioner of Internal Revenue with respect to all 
financial institutions, except brokers or dealers in securities, mutual 
funds, 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 chapter 
is delegated as follows:
    (1) To the Commissioner of Customs and Border Protection with 
respect to Sec.  1010.340;
    (2) To the Commissioner of Internal Revenue except with respect to 
Sec.  1010.340.
    (d) Authority for the imposition of civil penalties for violations 
of this chapter lies with the Director of FinCEN.
    (e) Periodic reports shall be made to the Director, FinCEN 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 Director, FinCEN may direct. 
Evidence of specific violations of any of the requirements of this 
chapter may be submitted to the Director, FinCEN at any time.
    (f) The Director, FinCEN 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 chapter.
    (g) The authority to enforce the provisions of 31 U.S.C. 5314 and 
Sec. Sec.  1010.350 and 1010.420 of this chapter 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 1010.350 and 1010.420 of 
this chapter, the authority to: assess and collect civil penalties 
under 31 U.S.C. 5321 and 31 CFR 1010.820; 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 I of this part 1010; issue administrative rulings 
under subpart G of this part 1010; and take any other action reasonably 
necessary for the enforcement of these and related provisions, 
including pursuit of injunctions.


Sec.  1010.820  Civil penalty.

    (a) For any willful violation, committed on or before October 12, 
1984, of any reporting requirement for financial institutions under 
this chapter or of any recordkeeping requirements of Sec. Sec.  
1010.311, 1010.313, 1020.315, 1021.311 or 1021.313, the Secretary may

[[Page 65839]]

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 chapter or of the recordkeeping requirements of 
Sec.  1010.420, 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.  1010.420, under this 
chapter, 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.  1010.340 
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.  1010.830.
    (e) For any willful violation of Sec.  1010.314 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 chapter 
(except Sec.  1010.350, Sec.  1010.360 or Sec.  1010.420), 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.  1010.350, Sec.  1010.360 or Sec.  1010.420, 
the Secretary may assess upon any person, a civil penalty:
    (1) In the case of a violation of Sec.  1010.360 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.  1010.350 or Sec.  1010.420 
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 
chapter, committed after October 27, 1986, the Secretary may assess 
upon any financial institution a civil penalty not to exceed $500.


Sec.  1010.830  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.  1010.340 are subject to seizure and forfeiture to the United 
States if such report has not been filed as required in Sec.  1010.360, 
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.  1010.840  Criminal penalty.

    (a) Any person who willfully violates any provision of Title I of 
Public Law 91-508, or of this chapter 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 Public Law 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 
Public Law 91-508, or of this chapter 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 
Public Law 91-508, or of this chapter 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 
chapter may, upon conviction thereof, be fined not more than $10,000 or 
be imprisoned not more than 5 years, or both.


Sec.  1010.850  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.  1010.340 and 1010.360 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.  1010.340 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.

Subpart I--Summons


Sec.  1010.911  General.

    For any investigation for the purpose of civil enforcement of 
violations of the Bank Secrecy Act, or any regulation issued pursuant 
to the Bank Secrecy Act, the Secretary or delegate of the Secretary may 
summon a financial institution or an officer or employee of a financial 
institution (including a

[[Page 65840]]

former officer or employee), or any person having possession, custody, 
or care of any of the records and reports required under the Bank 
Secrecy Act or this chapter 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.  1010.912  Persons who may issue summons.

    For purposes of this chapter, the following officials are hereby 
designated as delegates of the Secretary who are authorized to issue a 
summons under Sec.  1010.911, solely for the purposes of civil 
enforcement of this chapter:
    (a) FinCEN. The Director, FinCEN.
    (b) Internal Revenue Service. Except with respect to Sec.  1010.340 
of this chapter, 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 chapter, 
the Chief (Criminal Investigation) or a delegate.
    (c) Customs and Border Protection. With respect to Sec.  1010.340 
of this chapter, the Commissioner, the Deputy Commissioner, the 
Assistant Commissioner (Enforcement), Regional Commissioners, Assistant 
Regional Commissioners (Enforcement), and Special Agents in Charge.


Sec.  1010.913  Contents of summons.

    (a) Summons for testimony. Any summons issued under Sec.  1010.911 
of this chapter 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.  
1010.912 of this chapter);
    (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.  1010.911 of this chapter 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 who are authorized to issue such a summons under Sec.  
1010.912 of this chapter);
    (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.


Sec.  1010.914  Service of summons.

    (a) Who may serve. Any delegate of the Secretary authorized under 
Sec.  1010.912 of this chapter 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 chapter.
    (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.


Sec.  1010.915  Examination of witnesses and records.

    (a) General. Any delegate of the Secretary authorized under Sec.  
1010.912 of this chapter 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 
chapter 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.  1010.912(a) 
of this chapter so authorizes in writing, or it is otherwise required 
by law, no delegate of the Secretary listed under Sec.  1010.912 (b) or 
(c) of this chapter 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 chapter, 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 chapter, 
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 the Department of Justice in 
connection with a possible violation of Federal law.


Sec.  1010.916  Enforcement of summons.

    In the case of contumacy by, or refusal to obey a summons issued 
to, any person under this chapter, the Secretary or any delegate of the 
Secretary listed under Sec.  1010.912 of this chapter 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,

[[Page 65841]]

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.  1010.912(a) of this chapter, prompt 
notification of the referral must be made to the Director, FinCEN. 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.


Sec.  1010.917  Payment of expenses.

    Persons summoned under this chapter 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 chapter.

Subpart J--Miscellaneous


Sec.  1010.920  Access to records.

    Except as provided in Sec. Sec.  1020.410(b)(1), 1021.410(a), and 
1023.410(a)(1), and except for the purpose of assuring compliance with 
the recordkeeping and reporting requirements of this chapter, this 
chapter does not authorize the Secretary or any other person to inspect 
or review the records required to be maintained by this chapter. Other 
inspection, review or access to such records is governed by other 
applicable law.


Sec.  1010.930  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 Bank Secrecy 
Act or of this chapter, 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.


Sec.  1010.940  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.  1010.950  Availability of information.

    (a) The Secretary may within his discretion disclose information 
reported under this chapter 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 chapter 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.
    (c) The Secretary may make any information set forth in any report 
received pursuant to this chapter 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 chapter 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.


Sec.  1010.960  Disclosure.

    All reports required under this chapter and all records of such 
reports are specifically exempted from disclosure under section 552 of 
Title 5, United States Code.


Sec.  1010.970  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 chapter. 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.  1010.306(a), 
1021.311, and 1021.410, grant exemptions to the casinos in any State 
whose regulatory system substantially meets the reporting and 
recordkeeping requirements of this chapter.
    (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 chapter 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;

[[Page 65842]]

    (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 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.


Sec.  1010.980  Dollars as including foreign currency.

    Wherever in this chapter an amount is Stated in dollars, it shall 
be deemed to mean also the equivalent amount in any foreign currency.

PARTS 1011-1019 [RESERVED]

Part 1020--RULE FOR BANKS

Subpart A--Definitions
Sec.
1020.100 Definitions.
Subpart B--Programs
1020.200 General.
1020.210 Anti-money laundering program requirements for financial 
institutions regulated only by a Federal functional regulator, 
including banks, savings associations, and credit unions.
1020.220 Customer Identification Programs for banks, savings 
associations, credit unions, and certain non-Federally regulated 
banks.
Subpart C--Reports Required To Be Made by Banks
1020.300 General.
1020.310 Reports of transactions in currency.
1020.311 Filing obligations.
1020.312 Identification required.
1020.313 Aggregation.
1020.314 Structured transactions.
1020.315 Transactions of exempt persons.
1020.320 Reports by banks of suspicious transactions.
Subpart D--Records Required To Be Maintained by Banks
1020.400 General.
1020.410 Records to be made and retained by banks.
Subpart E--Special Information Sharing Procedures To Deter Money 
Laundering and Terrorist Activity
1020.500 General.
1020.520 Special information sharing procedures to deter money 
laundering and terrorist activity for banks.
1020.530 [Reserved].
1020.540 Voluntary information sharing among financial institutions.
Subpart F--Special Standards of Diligence; Prohibitions, and Special 
Measures for Banks
1020.600 General.
1020.610 Due diligence programs for correspondent accounts for 
foreign financial institutions.
1020.620 Due diligence programs for private banking accounts.
1020.630 Prohibition on correspondent accounts for foreign shell 
banks; records concerning owners of foreign banks and agents for 
service of legal process.
1020.640 [Reserved].
1020.670 Summons or subpoena of foreign bank records; Termination of 
correspondent relationship.

Subpart A--Definitions


Sec.  1020.100  Definitions.

    Refer to Sec.  1010.100 of this Chapter for general definitions not 
noted herein. To the extent there is a differing definition in Sec.  
1010.100 of this Chapter, the definition in this Section is what 
applies to Part 1020. Unless otherwise indicated, for purposes of this 
Part:
    (a) Account. For purposes of Sec.  1020.220:
    (1) 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.
    (2) Account does not include:
    (i) 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;
    (ii) An account that the bank acquires through an acquisition, 
merger, purchase of assets, or assumption of liabilities; or
    (iii) An account opened for the purpose of participating in an 
employee benefit plan established under the Employee Retirement Income 
Security Act of 1974.
    (b) Bank. For the purposes of Sec.  1020.220, means:
    (1) A bank, as that term is defined in Sec.  1010.100(d), that is 
subject to regulation by a Federal functional regulator; and
    (2) A credit union, private bank, and trust company, as set forth 
in Sec.  1010.100(d) of this Chapter, that does not have a Federal 
functional regulator.
    (c) Customer. For the purposes of Sec.  1020.220:
    (1) Customer means:
    (i) A person that opens a new account; and
    (ii) An individual who opens a new account for:
    (A) An individual who lacks legal capacity, such as a minor; or
    (B) An entity that is not a legal person, such as a civic club.
    (2) Customer does not include:
    (i) A financial institution regulated by a Federal functional 
regulator or a bank regulated by a State bank regulator;
    (ii) A person described in Sec.  1020.315(b)(2) through (b)(4); or
    (iii) 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.
    (d) Financial institution means:
    (1) For the purposes of Sec.  1020.210, 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) For the purposes of Sec.  1020.220, financial institution is 
defined at 31 U.S.C. 5312(a)(2) and (c)(1).

Subpart B--Programs


Sec.  1020.200  General.

    Banks are subject to the program requirements set forth and cross 
referenced in this subpart. Banks should also refer to Subpart B of 
Part 1010 of this Chapter for program requirements contained in that 
subpart which apply to banks.


Sec.  1020.210  Anti-money laundering program 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.  1010.610 and 
1010.620 and the regulation of its Federal functional regulator 
governing such programs.

[[Page 65843]]

Sec.  1020.220  Customer Identification Programs for banks, savings 
associations, credit unions, and certain non-Federally regulated banks.

    (a) 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 (a)(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 (a)(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 (a)(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 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(a)(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 (a)(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 (a)(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 
(a)(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 the customer's true identity using the verification methods 
described in paragraphs (a)(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;

[[Page 65844]]

    (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 (a) of this section.
    (i) Required records. At a minimum, the record must include:
    (A) All identifying information about a customer obtained under 
paragraph (a)(2)(i) of this section;
    (B) A description of any document that was relied on under 
paragraph (a)(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 
(a)(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 (a)(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 (a)(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 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 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 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.
    (b) 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.
    (c) Other requirements unaffected. Nothing in this section relieves 
a bank of its obligation to comply with any other provision in this 
chapter, including provisions concerning information that must be 
obtained, verified, or maintained in connection with any account or 
transaction.

Subpart C--Reports Required To Be Made By Banks


Sec.  1020.300  General.

    Banks are subject to the reporting requirements set forth and cross 
referenced in this subpart. Banks should also refer to Subpart C of 
Part 1010 of this Chapter for reporting requirements contained in that 
subpart which apply to banks.


Sec.  1020.310  Reports of transactions in currency.

    The reports of transactions in currency requirements for banks are 
located in subpart C of Part 1010 of this Chapter and this subpart.


Sec.  1020.311  Filing obligations.

    Refer to Sec.  1010.311 of this Chapter for reports of transactions 
in currency filing obligations for banks.


Sec.  1020.312  Identification required.

    Refer to Sec.  1010.312 of this Chapter for identification 
requirements for reports of transactions in currency filed by banks.


Sec.  1020.313  Aggregation.

    Refer to Sec.  1010.313 of this Chapter for reports of transactions 
in currency aggregation requirements for banks.


Sec.  1020.314  Structured transactions.

    Refer to Sec.  1010.314 of this Chapter for rules regarding 
structured transactions for banks.


Sec.  1020.315  Transactions of exempt persons.

    (a) General. No bank is required to file a report otherwise 
required by Sec.  1010.311 with respect to any transaction in currency 
between an exempt person and such bank, or, to the extent provided in 
paragraph (e)(6) of this section, between such exempt person and other 
banks affiliated with such bank. (A limitation on the exemption 
described in this paragraph (a) is set forth in paragraph (f) of this 
section.)
    (b) Exempt person. For purposes of this section, an exempt person 
is:

[[Page 65845]]

    (1) A bank, to the extent of such bank's domestic operations;
    (2) A department or agency of the United States, of any State, or 
of any political subdivision of any State;
    (3) 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;
    (4) 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 (b)(4), a person that is 
a financial institution, other than a bank, is an exempt person only to 
the extent of its domestic operations;
    (5) Any subsidiary, other than a bank, of any entity described in 
paragraph (b)(4) 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 (b)(5), a person that is a financial institution, other than 
a bank, is an exempt person only to the extent of its domestic 
operations;
    (6) 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 section, a ``non-listed 
business''), other than an enterprise specified in paragraph (e)(8) of 
this section, that:
    (i) Maintains a transaction account, as defined in paragraph (e)(9) 
of this section, at the bank for at least two months, except as 
provided in paragraph (c)(2)(ii) of this section;
    (ii) Frequently engages in transactions in currency with the bank 
in excess of $10,000; and
    (iii) 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
    (7) With respect solely to withdrawals for payroll purposes from 
existing exemptible accounts, any other person (for purposes of this 
section, a ``payroll customer'') that:
    (i) Maintains a transaction account, as defined in paragraph (e)(9) 
of this section, at the bank for at least two months, except as 
provided in paragraph (c)(2)(ii) of this section;
    (ii) Operates a firm that regularly withdraws more than $10,000 in 
order to pay its United States employees in currency; and
    (iii) 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.
    (c) Designation of certain exempt persons--(1) General. Except as 
provided in paragraph (c)(2) 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 section. The 
designation must be made separately by each bank that treats the 
customer as an exempt person, except as provided in paragraph (e)(6) of 
this section.
    (2) Special rules.
    (i) A bank is not required to file a FinCEN Form 110 with respect 
to the transfer of currency to or from:
    (A) Any of the twelve Federal Reserve Banks; or
    (B) Any exempt person as described in paragraphs (b)(1) to (3) of 
this section.
    (ii) Notwithstanding subparagraphs (b)(6)(i) and (b)(7)(i) of this 
section, and if the requirements under this section are otherwise 
satisfied, a bank may designate a non-listed business or a payroll 
customer, as described in paragraphs (b)(6) and (7) 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.
    (d) Annual review. At least once each year, a bank must review the 
eligibility of an exempt person described in paragraphs (b)(4) to (7) 
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 (h)(2) of this section to each existing account of an exempt 
person described in paragraphs (b)(6) or (b)(7) of this section.
    (e) Operating rules--(1) General rule. Subject to the specific 
rules of this section, 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 (b) of this section), to document the basis for 
its conclusions, and document its compliance, with the terms of this 
section, 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 (h)(2) of this 
section, such steps that a reasonable and prudent bank would take and 
document to identify suspicious transactions as required by paragraph 
(h)(2) of this section.
    (2) 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 
(b)(2) or (b)(3) of this section, or if such person is known generally 
in the community to be a State, 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 (b)(3) 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.
    (3) Stock exchange listings. In determining whether a person is 
described in paragraph (b)(4) 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.
    (4) Listed company subsidiaries. In determining whether a person is 
described in paragraph (b)(5) of this section, a bank may rely upon:
    (i) Any reasonably authenticated corporate officer's certificate;

[[Page 65846]]

    (ii) Any reasonably authenticated photocopy of Internal Revenue 
Service Form 851 (Affiliation Schedule) or the equivalent thereof for 
the appropriate tax year; or
    (iii) A person's Annual Report or Form 10-K, as filed in each case 
with the Securities and Exchange Commission.
    (5) 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.
    (6) Affiliated banks. The designation required by paragraph (c) 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.
    (7) Sole proprietorships. A sole proprietorship may be treated as a 
non-listed business if it otherwise meets the requirements of paragraph 
(b)(6) 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 (b)(7) of this section, as 
applicable.
    (8) 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 section: 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 (e)(8).
    (9) 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 enterprise are not exemptible accounts. 
A transaction account, for purposes of this section, 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 section, is any 
interest-bearing account that is described as a money market deposit 
account in 12 CFR 204.2(d)(2).
    (10) Documentation. The records maintained by a bank to document 
its compliance with and administration of the rules of this section 
shall be maintained in accordance with the provisions of Sec.  
1010.430.
    (f) 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 (a) of 
this section.
    (g) Limitation on liability. (1) No bank shall be subject to 
penalty under this chapter for failure to file a report required by 
Sec.  1010.311 with respect to a transaction in currency by an exempt 
person with respect to which the requirements of this section have been 
satisfied, unless the bank:
    (i) Knowingly files false or incomplete information with respect to 
the transaction or the customer engaging in the transaction; or
    (ii) Has reason to believe that the customer does not meet the 
criteria established by this section for treatment of the transactor as 
an exempt person or that the transaction is not a transaction of the 
exempt person.
    (2) Subject to the specific terms of this section, 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 section 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) of 
this section for an exempt person described in paragraph (b)(4) to (7) 
of this section, shall occur no less than once each year.
    (3) 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.
    (h) Obligations to file suspicious activity reports and maintain 
system for monitoring transactions in currency. (1) Nothing in this 
section relieves a bank of the obligation, or reduces in any way such 
bank's obligation, to file a report required by Sec.  1020.320 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.  1020.320(a)(2)(i), 
(ii), or (iii), or relieves a bank of any reporting or recordkeeping 
obligation imposed by this chapter (except the obligation to report 
transactions in currency pursuant to this chapter to the extent 
provided in this section). 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.  1020.320.
    (2) Consistent with its annual review obligations under paragraph 
(d) 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 (h)(1) of this section and Sec.  
1020.320 with respect to all exempt persons.
    (i) Revocation. Without any action on the part of the Department of 
the Treasury and subject to the limitation on liability contained in 
paragraph (g)(2) of this section:
    (1) The status of an entity as an exempt person under paragraph 
(b)(4) of this section ceases once such entity ceases to be listed on 
the applicable stock exchange; and
    (2) The status of a subsidiary as an exempt person under paragraph 
(b)(5) 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 
1506-0012)

[[Page 65847]]

Sec.  1020.320  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 
chapter or of any other regulations promulgated under the Bank Secrecy 
Act; or
    (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 chapter, 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 chapter. Such failure may also violate 
provisions of Title 12 of the Code of Federal Regulations.

Subpart D--Records Required To Be Maintained By Banks


Sec.  1020.400  General.

    Banks are subject to the recordkeeping requirements set forth and 
cross referenced in this subpart. Banks should also refer to Subpart D 
of Part 1010 of this Chapter for recordkeeping requirements contained 
in that subpart which apply to banks.


Sec.  1020.410  Records to be made and retained by banks.

    (a) Each agent, agency, branch, or office located within the United 
States of a bank is subject to the requirements of this paragraph (a) 
with respect to a funds transfer in the amount of $3,000 or more, and 
is required to retain either the original or a microfilm or other copy 
or reproduction of each of the following:
    (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

[[Page 65848]]

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 (a)(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 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 (a)(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 (a)(1)(i) and (a)(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 
(a)(1)(iii) and (a)(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 
(a)(2) and (a)(3) of this section, a bank shall 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;
    (I) A Federal, State or local government agency or instrumentality; 
or
    (J) A mutual fund; 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.
    (b)(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

[[Page 65849]]

specified, the required identification, it shall nevertheless not be 
deemed to be in violation of this section if it has made a reasonable 
effort to secure such identification, and 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 (c)(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 (b)(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 
(b)(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 ambassadors, ministers, career diplomatic or 
consular officers, or naval, military or other attach[eacute]s 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 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.
    (4) In instances described in paragraphs (b)(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.
    (5) 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.
    (c) 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 
(c)(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 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

[[Page 65850]]

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.

Subpart E--Special Information Sharing Procedures To Deter Money 
Laundering and Terrorist Activity


Sec.  1020.500  General.

    Banks are subject to the special information sharing procedures to 
deter money laundering and terrorist activity requirements set forth 
and cross referenced in this subpart. Banks should also refer to 
Subpart E of Part 1010 of this Chapter for special information sharing 
procedures to deter money laundering and terrorist activity contained 
in that subpart which apply to banks.


Sec.  1020.520  Special information sharing procedures to deter money 
laundering and terrorist activity for banks.

    (a) Refer to Sec.  1010.520 of this Chapter.
    (b) [Reserved]


Sec.  1020.530  [Reserved]


Sec.  1020.540  Voluntary information sharing among financial 
institutions.

    (a) Refer to Sec.  1010.540 of this Chapter.
    (b) [Reserved]

Subpart F--Special Standards of Diligence; Prohibitions; and 
Special Measures


Sec.  1020.600  General.

    Banks are subject to the special standards of diligence; 
prohibitions; and special measures requirements set forth and cross 
referenced in this subpart. Banks should also refer to Subpart F of 
Part 1010 of this Chapter for special standards of diligence; 
prohibitions; and special measures contained in that subpart which 
apply to banks.


Sec.  1020.610  Due diligence programs for correspondent accounts for 
foreign financial institutions.

    (a) Refer to Sec.  1010.610 of this Chapter.
    (b) [Reserved]


Sec.  1020.620  Due diligence programs for private banking accounts.

    (a) Refer to Sec.  1010.620 of this Chapter.
    (b) [Reserved]


Sec.  1020.630  Prohibition on correspondent accounts for foreign shell 
banks; records concerning owners of foreign banks and agents for 
service of legal process.

    (a) Refer to Sec.  1010.630 of this Chapter.
    (b) [Reserved]


Sec.  1020.640  [Reserved]


Sec.  1020.670  Summons or subpoena of foreign bank records; 
Termination of correspondent relationship.

    (a) Refer to Sec.  1010.670 of this Chapter.
    (b) [Reserved]

PART 1021--RULES FOR CASINOS AND CARD CLUBS

Subpart A--Definitions
Sec.
1021.100 Definitions.
Subpart B--Programs
1021.200 General.
1021.210 Anti-money laundering program requirements for casinos.
Subpart C--Reports Required To Be Made By Casinos and Card Clubs
1021.300 General.
1021.310 Reports of transactions in currency.
1021.311 Filing obligations.
1021.312 Identification required.
1021.313 Aggregation.
1021.314 Structured transactions.
1021.315 Exemptions.
1021.320 Reports by casinos of suspicious transactions.
1021.330 Exceptions to the reporting requirements of 31 U.S.C. 5331.
Subpart D--Records Required To Be Maintained By Casinos and Card Clubs
1021.400 General.
1021.410 Additional records to be made and retained by casinos.
Subpart E--Special Information Sharing Procedures To Deter Money 
Laundering and Terrorist Activity for Casinos and Card Clubs
1021.500 General.
1021.520 Special information sharing procedures to deter money 
laundering and terrorist activity for casinos and card clubs.
1021.530 [Reserved]
1021.540 Voluntary information sharing among financial institutions.
Subpart F--Special Standards of Diligence; Prohibitions, and Special 
Measures for Casinos and Card Clubs
1021.600 General.
1021.610 Due diligence programs for correspondent accounts for 
foreign financial institutions.
1021.620 Due diligence programs for private banking accounts.
1021.630 Prohibition on correspondent accounts for foreign shell 
banks; records concerning owners of foreign banks and agents for 
service of legal process.
1021.640 [Reserved]
1021.670 Summons or subpoena of foreign bank records; Termination of 
correspondent relationship.

Subpart A--Definitions


Sec.  1021.100  Definitions.

    Refer to Sec.  1010.100 of this Chapter for general definitions not 
noted herein. To the extent there is a differing definition in Sec.  
1010.100 of this Chapter, the definition in this Section is what 
applies to Part 1021. Unless otherwise indicated, for purposes of this 
Part:
    (a) 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.
    (b) Casino account number means any and all numbers by which a 
casino identifies a customer.
    (c) Customer includes every person which is involved in a 
transaction to which this chapter applies with a casino, whether or not 
that person participates, or intends to participate, in the gaming 
activities offered by that casino.
    (d) 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 chapter, each casino may have only one gaming day, common to 
all of its divisions.
    (e) Machine-readable means capable of being read by an automated 
data processing system.

Subpart B--Programs


Sec.  1021.200   General.

    Casinos and card clubs are subject to the program requirements set 
forth and cross referenced in this subpart. Casinos and card clubs 
should also refer to Subpart B of Part 1010 of this Chapter for program 
requirements contained in that subpart which apply to casinos and card 
clubs.


Sec.  1021.210  Anti-money laundering program requirements for casinos.

    (a) 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 paragraph (b) of this section.
    (b) 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.

[[Page 65851]]

chapter 53, subchapter II and the regulations contained in this 
chapter.
    (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 chapter, 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 chapter, 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.  1021.320;
    (C) Whether any record as described in subpart D of Part 1010 of 
this Chapter or subpart D of this Part 1021 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.

Subpart C--Reports Required To Be Made By Casinos and Card Clubs


Sec.  1021.300   General.

    Casinos and card clubs are subject to the reporting requirements 
set forth and cross referenced in this subpart. Casinos and card clubs 
should also refer to Subpart C of Part 1010 of this Chapter for 
reporting requirements contained in that subpart which apply to casinos 
and card clubs.


Sec.  1021.310  Reports of transactions in currency.

    The reports of transactions in currency requirements for casinos 
are located in subpart C of Part 1010 of this Chapter and this subpart.


Sec.  1021.311  Filing obligations.

    Each casino shall file a report of each transaction in currency, 
involving either cash in or cash out, of more than $10,000.
    (a) Transactions in currency involving cash in include, but are not 
limited to:
    (1) Purchases of chips, tokens, and other gaming instruments;
    (2) Front money deposits;
    (3) Safekeeping deposits;
    (4) Payments on any form of credit, including markers and counter 
checks;
    (5) Bets of currency, including money plays;
    (6) Currency received by a casino for transmittal of funds through 
wire transfer for a customer;
    (7) Purchases of a casino's check;
    (8) Exchanges of currency for currency, including foreign currency; 
and
    (9) Bills inserted into electronic gaming devices.
    (b) Transactions in currency involving cash out include, but are 
not limited to:
    (1) Redemptions of chips, tokens, tickets, and other gaming 
instruments;
    (2) Front money withdrawals;
    (3) Safekeeping withdrawals;
    (4) Advances on any form of credit, including markers and counter 
checks;
    (5) Payments on bets;
    (6) Payments by a casino to a customer based on receipt of funds 
through wire transfers;
    (7) Cashing of checks or other negotiable instruments;
    (8) Exchanges of currency for currency, including foreign currency;
    (9) Travel and complimentary expenses and gaming incentives; and
    (10) Payment for tournament, contests, and other promotions.
    (c) Other provisions of this chapter notwithstanding, casinos are 
exempted from the reporting obligations found in this section and Sec.  
1021.313 for the following transactions in currency or currency 
transactions:
    (1) 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.  1010.100(ff) of this Chapter, so long as such 
transactions are conducted pursuant to a contractual or other 
arrangement with a casino covering the financial services in paragraphs 
(a)(8), (b)(7), and (b)(8) of this section;
    (2) 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;
    (3) Bills inserted into electronic gaming devices in multiple 
transactions (unless a casino has knowledge pursuant to Sec.  1021.313 
in which case this exemption would not apply); and
    (4) Jackpots from slot machines or video lottery terminals.


Sec.  1021.312  Identification required.

    Refer to Sec.  1010.312 of this Chapter for identification 
requirements for reports of transaction in currency filed by casinos 
and card clubs.


Sec.  1021.313  Aggregation.

    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 section, 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.


Sec.  1021.314  Structured transactions.

    Refer to Sec.  1010.314 of this Chapter for rules regarding 
structured transactions for casinos.


Sec.  1021.315  Exemptions.

    Refer to Sec.  1010.315 of this Chapter for exemptions from the 
obligation to file reports of transactions in currency for casinos.


Sec.  1021.320  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):

[[Page 65852]]

    (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 chapter or of any other regulations 
promulgated under the Bank Secrecy Act;
    (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 chapter, 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 chapter.
    (g) Applicability date. This section applies to transactions 
occurring after March 25, 2003.


Sec.  1021.330  Exceptions to the reporting requirements of 31 U.S.C. 
5331.

    (a) Receipt of currency by certain casinos having gross annual 
gaming revenue in excess of $1,000,000--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.  1010.306, Sec.  1021.311, or Sec.  1021.313 and is subject to the 
recordkeeping requirements of Sec.  1021.410, 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.
    (b) Casinos exempt under Sec.  1010.970(c). Pursuant to Sec.  
1010.970, the Secretary may exempt from the reporting and recordkeeping 
requirements under Sec.  1010.306, Sec.  1021.311, Sec.  1021.313 or 
Sec.  1021.410 casinos in any state whose regulatory system 
substantially meets the reporting and recordkeeping requirements of 
this chapter. Such casinos shall not be required to report receipt of 
currency under 31 U.S.C. 5331 and this section.
    (c) Reporting of currency received in a non-gaming business. Non-
gaming 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 (a) or (b) of this section must report with respect to 
currency in excess of $10,000 received in its non-gaming businesses.
    (d) Example. The following example illustrates the application of 
the rules in paragraphs (a) and (c) 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.  
1010.306, 1021.311, and 1021.313. 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 (a) 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.  1010.306, 1021.311, and 
1021.313.

Subpart D--Records Required To Be Maintained By Casinos and Card 
Clubs


Sec.  1021.400  General.

    Casinos and card clubs are subject to the recordkeeping 
requirements set forth and cross referenced in this subpart. Casinos 
and card clubs should also refer to Subpart D of Part 1010 of this 
Chapter

[[Page 65853]]

for recordkeeping requirements contained in that subpart which apply to 
casinos and card clubs.


Sec.  1021.410  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.  1010.312 of 
this Chapter, and the specific identifying information shall be 
recorded in the manner described in Sec.  1010.312 of this Chapter. 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 it has made a reasonable effort to secure such number and 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;
    (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.  
1021.210(b).
    (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.  
1010.410 of this Chapter 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.  1010.410 of this Chapter 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.

[[Page 65854]]

Subpart E--Special Information Sharing Procedures To Deter Money 
Laundering and Terrorist Activity for Casinos and Card Clubs


Sec.  1021.500  General.

    Casinos and card clubs are subject to the special information 
sharing procedures to deter money laundering and terrorist activity 
requirements set forth and cross referenced in this subpart. Casinos 
and card clubs should also refer to Subpart E of Part 1010 of this 
Chapter for special information sharing procedures to deter money 
laundering and terrorist activity contained in that subpart which apply 
to casinos and card clubs.


Sec.  1021.520  Special information sharing procedures to deter money 
laundering and terrorist activity for casinos and card clubs.

    (a) Refer to Sec.  1010.520 of this Chapter.
    (b) [Reserved]


Sec.  1021.530  [Reserved]


Sec.  1021.540  Voluntary information sharing among financial 
institutions.

    (a) Refer to Sec.  1010.540 of this Chapter.
    (b) [Reserved]

Subpart F--Special Standards of Diligence; Prohibitions; and 
Special Measures for Casinos and Card Clubs


Sec.  1021.600  General.

    Casinos and card clubs are subject to the special standards of 
diligence; prohibitions; and special measures requirements set forth 
and cross referenced in this subpart. Casinos and card clubs should 
also refer to Subpart F of Part 1010 of this Chapter for special 
standards of diligence; prohibitions; and special measures contained in 
that subpart which apply to casinos and card clubs.


Sec.  1021.610  Due diligence programs for correspondent accounts for 
foreign financial institutions.

    (a) Refer to Sec.  1010.610 of this Chapter.
    (b) [Reserved]


Sec.  1021.620  Due diligence programs for private banking accounts.

    (a) Refer to Sec.  1010.620 of this Chapter.
    (b) [Reserved]


Sec.  1021.630  Prohibition on correspondent accounts for foreign shell 
banks; records concerning owners of foreign banks and agents for 
service of legal process.

    (a) Refer to Sec.  1010.630 of this Chapter.
    (b) [Reserved]


Sec.  1021.640  [Reserved]


Sec.  1021.670  Summons or subpoena of foreign bank records; 
Termination of correspondent relationship.

    (a) Refer to Sec.  1010.670 of this Chapter.
    (b) [Reserved]

PART 1022--RULES FOR MONEY SERVICES BUSINESSES

Subpart A--Definitions
Sec.
1022.100 Definitions.
Subpart B--Programs
1022.200 General.
1022.210 Anti-money laundering programs for money services 
businesses.
Subpart C--Reports Required To Be Made By Money Services Businesses
1022.300 General.
1022.310 Reports of transactions in currency.
1022.311 Filing obligations.
1022.312 Identification required.
1022.313 Aggregation.
1022.314 Structured transactions.
1022.315 Exemptions.
1022.320 Reports by money services businesses of suspicious 
transactions.
1022.380 Registration of money services businesses.
Subpart D--Records Required To Be Maintained By Money Services 
Businesses
1022.400 General.
1022.410 Additional records to be made and retained by currency 
dealers or exchangers.
Subpart E--Special Information Sharing Procedures To Deter Money 
Laundering and Terrorist Activity
1022.500 General.
1022.520 Special information sharing procedures to deter money 
laundering and terrorist activity for money services businesses.
1022.530 [Reserved]
1022.540 Voluntary information sharing among financial institutions.
Subpart F--Special Standards of Diligence; Prohibitions, and Special 
Measures for Money Services Businesses
1022.600 General.
1022.610 [Reserved]
1022.620 [Reserved]
1022.630 [Reserved]
1022.640 [Reserved]
1022.670 [Reserved]

Subpart A--Definitions


Sec.  1022.100  Definitions.

    Refer to Sec.  1010.100 of this Chapter for general definitions not 
noted herein.

Subpart B--Programs


Sec.  1022.200  General.

    Money services businesses are subject to the program requirements 
set forth and cross referenced in this subpart. Money services 
businesses should also refer to Subpart B of Part 1010 of this Chapter 
for program requirements contained in that subpart which apply to money 
services businesses.


Sec.  1022.210  Anti-money laundering programs for money services 
businesses.

    (a) Each money services business, as defined by Sec.  1010.100(ff) 
of this Chapter, 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 chapter.
    (i) Policies, procedures, and internal controls developed and 
implemented under this section shall include provisions for complying 
with the requirements of this chapter 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.  
1022.380(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 chapter. The responsibilities of such person shall 
include assuring that:
    (i) The money services business properly files reports, and creates 
and

[[Page 65855]]

retains records, in accordance with applicable requirements of this 
chapter;
    (ii) The compliance program is updated as necessary to reflect 
current requirements of this chapter, 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 chapter.
    (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) Compliance 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.

Subpart C--Reports Required To Be Made By Money Services Businesses


Sec.  1022.300  General.

    Money services businesses are subject to the reporting requirements 
set forth and cross referenced in this subpart. Money services 
businesses should also refer to Subpart C of Part 1010 of this Chapter 
for reporting requirements contained in that subpart which apply to 
money services businesses.


Sec.  1022.310  Reports of transactions in currency.

    The reports of transactions in currency requirements for money 
services businesses are located in subpart C of Part 1010 of this 
Chapter and this subpart.


Sec.  1022.311  Filing obligations.

    Refer to Sec.  1010.311 of this Chapter for reports of transactions 
in currency filing obligations for money services businesses.


Sec.  1022.312  Identification required.

    Refer to Sec.  1010.312 of this Chapter for identification 
requirements for reports of transactions in currency filed by money 
services businesses.


Sec.  1022.313  Aggregation.

    Refer to Sec.  1010.313 of this Chapter for reports of transactions 
in currency aggregation requirements for money services businesses.


Sec.  1022.314  Structured transactions.

    Refer to Sec.  1010.314 of this Chapter for rules regarding 
structured transactions for money services businesses.


Sec.  1022.315  Exemptions.

    Refer to Sec.  1010.315 of this Chapter for exemptions from the 
obligation to file reports of transactions in currency for money 
services businesses.


Sec.  1022.320  Reports by money services businesses of suspicious 
transactions.

    (a) General. (1) Every money services business, described in Sec.  
1010.100(ff) (1), (3), (4), (5), or (6) of this Chapter, 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 chapter or of any other regulations 
promulgated under the Bank Secrecy Act; 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.
    (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

[[Page 65856]]

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 chapter, 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 chapter.
    (f) Applicability date. This section applies to transactions 
occurring after December 31, 2001.


Sec.  1022.380  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 
U.S. 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.  1010.100(ff) of this Chapter, is not required to 
register under this section, but a money services business that engages 
in activities described in Sec.  1010.100(ff) of this Chapter 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 Enterprise Computing Center in Detroit 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.  1010.430(d) of this Chapter.
    (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 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

[[Page 65857]]

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.  
1010.430(d) of this Chapter.
    (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 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.  1010.100(ff) of this Chapter;
    (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) Applicability date. This section is applicable as of September 
20, 1999. Registration of money services businesses under this section 
will not be required prior to December 31, 2001.

Subpart D--Records Required To Be Maintained By Money Services 
Businesses


Sec.  1022.400  General.

    Money services businesses are subject to the recordkeeping 
requirements set forth and cross referenced in this subpart. Money 
services businesses should also refer to Subpart D of Part 1010 of this 
Chapter for recordkeeping requirements contained in that subpart which 
apply to money services businesses.


Sec.  1022.410  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

[[Page 65858]]

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 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.

Subpart E--Special Information Sharing Procedures To Deter Money 
Laundering and Terrorist Activity


Sec.  1022.500  General.

    Money services businesses are subject to the special information 
sharing procedures to deter money laundering and terrorist activity 
requirements set forth and cross referenced in this subpart. Money 
services businesses should also refer to Subpart E of Part 1010 of this 
Chapter for special information sharing procedures to deter money 
laundering and terrorist activity contained in that subpart which apply 
to money services businesses.


Sec.  1022.520  Special information sharing procedures to deter money 
laundering and terrorist activity for money services businesses.

    (a) Refer to Sec.  1010.520 of this Chapter.
    (b) [Reserved]


Sec.  1022.530  [Reserved]


Sec.  1022.540  Voluntary information sharing among financial 
institutions.

    (a) Refer to Sec.  1010.540 of this Chapter.
    (b) [Reserved]

Subpart F--Special Standards of Diligence; Prohibitions; and 
Special Measures for Money Services Businesses


Sec.  1022.600   General.

    Money services businesses are subject to the special standards of 
diligence; prohibitions; and special measures requirements set forth 
and cross referenced in this subpart. Money services businesses should 
also refer to Subpart F of Part 1010 of this Chapter for special 
standards of diligence; prohibitions; and special measures contained in 
that subpart which apply to money services businesses.


Sec.  1022.610  [Reserved]


Sec.  1022.620  [Reserved]


Sec.  1022.630  [Reserved]


Sec.  1022.640  [Reserved]


Sec.  1022.670  [Reserved]

PART 1023--RULES FOR BROKERS OR DEALERS IN SECURITIES

Subpart A--Definitions
Sec.
1023.100 Definitions.
Subpart B--Programs
1023.200 General.
1023.210 Anti-money laundering program requirements for brokers or 
dealers in securities.
1023.220 Customer identification programs for broker-dealers.

[[Page 65859]]

Subpart C--Reports Required To Be Made By Brokers or Dealers in 
Securities
1023.300 General.
1023.310 Reports of transactions in currency.
1023.311 Filing obligations.
1023.312 Identification required.
1023.313 Aggregation.
1023.314 Structured transactions.
1023.315 Exemptions
1023.320 Reports by brokers or dealers in securities of suspicious 
transactions.
Subpart D--Records Required To Be Maintained By Brokers or Dealers in 
Securities
1023.400 General.
1023.410 Additional records to be made and retained by brokers or 
dealers in securities.
Subpart E--Special Information Sharing Procedures To Deter Money 
Laundering and Terrorist Activity
1023.500 General.
1023.520 Special information sharing procedures to deter money 
laundering and terrorist activity for brokers or dealers in 
securities.
1023.530 [Reserved]
1023.540 Voluntary information sharing among financial institutions.
Subpart F--Special Standards of Diligence; Prohibitions, and Special 
Measures for Brokers or Dealers in Securities
1023.600 General.
1023.610 Due diligence programs for correspondent accounts for 
foreign financial institutions.
1023.620 Due diligence programs for private banking accounts.
1023.630 Prohibition on correspondent accounts for foreign shell 
banks; records concerning owners of foreign banks and agents for 
service of legal process.
1023.640 [Reserved]
1023.670 Summons or subpoena of foreign bank account records; 
Termination of correspondent relationship.

Subpart A--Definitions


Sec.  1023.100  Definitions.

    Refer to Sec.  1010.100 of this Chapter for general definitions not 
noted herein. To the extent there is a differing definition in Sec.  
1010.100 of this Chapter, the definition in this Section is what 
applies to Part 1023. Unless otherwise indicated, for purposes of this 
Part:
    (a) Account. For purposes of Sec.  1023.220:
    (1) 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.
    (2) Account does not include:
    (i) An account that the broker-dealer acquires through any 
acquisition, merger, purchase of assets, or assumption of liabilities; 
or
    (ii) An account opened for the purpose of participating in an 
employee benefit plan established under the Employee Retirement Income 
Security Act of 1974.
    (b) 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).
    (c) Commission means, for the purposes of Sec.  1023.220, the 
United States Securities and Exchange Commission.
    (d) Customer. For purposes of Sec.  1023.220:
    (1) Customer means:
    (i) A person that opens a new account; and
    (ii) An individual who opens a new account for:
    (A) An individual who lacks legal capacity; or
    (B) An entity that is not a legal person.
    (2) Customer does not include:
    (i) A financial institution regulated by a Federal functional 
regulator or a bank regulated by a state bank regulator;
    (ii) A person described in Sec.  1020.315(b)(2) through (4) of this 
Chapter; or
    (iii) 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.
    (e) Financial institution is defined at 31 U.S.C. 5312(a)(2) and 
(c)(1).

Subpart B--Programs


Sec.  1023.200  General.

    Brokers or dealers in securities are subject to the program 
requirements set forth and cross referenced in this subpart. Brokers or 
dealers in securities should also refer to Subpart B of Part 1010 of 
this Chapter for program requirements contained in that subpart which 
apply to brokers or dealers in securities.


Sec.  1023.210  Anti-money laundering program requirements for brokers 
or dealers in securities.

    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:
    (a) The financial institution complies with the requirements of 
Sec. Sec.  1010.610 of this Chapter and 1010.620 and any applicable 
regulation of its Federal functional regulator governing the 
establishment and implementation of anti-money laundering programs; and
    (b)(1) 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
    (2) The rules, regulations, or requirements of the self-regulatory 
organization have been approved, if required, by the appropriate 
Federal functional regulator.


Sec.  1023.220  Customer identification programs for broker-dealers.

    (a) 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 (a)(1) through (a)(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 
(a)(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 (a)(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

[[Page 65860]]

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 (a)(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 (a)(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 (a)(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
    (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 (a)(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 (a) of this section.
    (i) Required records. At a minimum, the record must include:
    (A) All identifying information about a customer obtained under 
paragraph (a)(2)(i) of this section,
    (B) A description of any document that was relied on under 
paragraph (a)(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 
(a)(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 (a)(3)(i)(A) of this section for five 
years after the account is closed and the records made under paragraphs 
(a)(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 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.

[[Page 65861]]

    (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.
    (b) 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.
    (c) Other requirements unaffected. Nothing in this section relieves 
a broker-dealer of its obligation to comply with any other provision of 
this chapter, including provisions concerning information that must be 
obtained, verified, or maintained in connection with any account or 
transaction.

Subpart C--Reports Required To Be Made By Brokers or Dealers in 
Securities


Sec.  1023.300  General.

    Brokers or dealers in securities are subject to the reporting 
requirements set forth and cross referenced in this subpart. Brokers or 
dealers in securities should also refer to Subpart C of Part 1010 of 
this Chapter for reporting requirements contained in that subpart which 
apply to brokers or dealers in securities.


Sec.  1023.310  Reports of transactions in currency.

    The reports of transactions in currency requirements for brokers or 
dealers in securities are located in subpart C of Part 1010 of this 
Chapter and this subpart.


Sec.  1023.311  Filing obligations.

    Refer to Sec.  1010.311 of this Chapter for reports of transactions 
in currency filing obligations for brokers or dealers in securities.


Sec.  1023.312  Identification required.

    Refer to Sec.  1010.312 of this Chapter for identification 
requirements for reports of transactions in currency filed by brokers 
or dealers in securities.


Sec.  1023.313  Aggregation.

    Refer to Sec.  1010.313 of this Chapter for reports of transactions 
in currency aggregation requirements for brokers or dealers in 
securities.


Sec.  1023.314  Structured transactions.

    Refer to Sec.  1010.314 of this Chapter for rules regarding 
structured transactions for brokers or dealers in securities.


Sec.  1023.315  Exemptions.

    Refer to Sec.  1010.315 of this Chapter for exemptions from the 
obligation to file reports of transactions in currency for brokers or 
dealers in securities.


Sec.  1023.320  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 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 chapter or of any other regulations 
promulgated under the Bank Secrecy Act;
    (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

[[Page 65862]]

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 by the 
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 broker-
dealer 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, a broker-dealer 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 broker-dealer shall immediately notify by telephone an 
appropriate law enforcement authority in addition to filing timely a 
SAR-SF. 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-SF 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-
SF to report:
    (i) A robbery or burglary committed or attempted of the broker-
dealer that 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-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 broker-dealer, and shall be deemed to have been 
filed with the SAR-SF. 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 chapter, 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 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-SF or to provide any information that would disclose 
that a SAR-SF 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 chapter.
    (h) Applicability date. This section applies to transactions 
occurring after December 30, 2002.

Subpart D--Records Required To Be Maintained by Brokers or Dealers 
in Securities


Sec.  1023.400  General.

    Brokers or dealers in securities are subject to the recordkeeping 
requirements set forth and cross referenced in this subpart. Brokers or 
dealers in securities should also refer to Subpart D of Part 1010 of 
this Chapter for recordkeeping requirements contained in that subpart 
which apply to brokers or dealers in securities.


Sec.  1023.410  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: 
It has made a reasonable effort to secure such identification, and it 
maintains a list containing the names, addresses, and

[[Page 65863]]

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 ambassadors, ministers, career 
diplomatic or consular officers, or 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:
    (1) Each document granting signature or trading authority over each 
customer's account;
    (2) Each record described in 17 CFR 240.17a-3(a)(1), (2), (3), (5), 
(6), (7), (8), and (9);
    (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.

Subpart E--Special Information Sharing Procedures To Deter Money 
Laundering and Terrorist Activity


Sec.  1023.500  General.

    Brokers or dealers in securities are subject to the special 
information sharing procedures to deter money laundering and terrorist 
activity requirements set forth and cross referenced in this subpart. 
Brokers or dealers in securities should also refer to Subpart E of Part 
1010 of this Chapter for special information sharing procedures to 
deter money laundering and terrorist activity contained in that subpart 
which apply to brokers or dealers in securities.


Sec.  1023.520  Special information sharing procedures to deter money 
laundering and terrorist activity for brokers or dealers in securities.

    (a) Refer to Sec.  1010.520 of this Chapter.
    (b) [Reserved]


Sec.  1023.530  [Reserved]


Sec.  1023.540  Voluntary information sharing among financial 
institutions.

    (a) Refer to Sec.  1010.540 of this Chapter.
    (b) [Reserved]

Subpart F--Special Standards of Diligence; Prohibitions; and 
Special Measures for Brokers or Dealers in Securities


Sec.  1023.600  General.

    Brokers or dealers in securities are subject to the special 
standards of diligence; prohibitions; and special measures requirements 
set forth and cross referenced in this subpart. Brokers or dealers in 
securities should also refer to Subpart F of Part 1010 of this Chapter 
for special standards of diligence; prohibitions; and special measures 
contained in that subpart which apply to brokers or dealers in 
securities.


Sec.  1023.610  Due diligence programs for correspondent accounts for 
foreign financial institutions.

    (a) Refer to Sec.  1010.610 of this Chapter.
    (b) [Reserved]


Sec.  1023.620  Due diligence programs for private banking accounts.

    (a) Refer to Sec.  1010.620 of this Chapter.
    (b) [Reserved]


Sec.  1023.630  Prohibition on correspondent accounts for foreign shell 
banks; records concerning owners of foreign banks and agents for 
service of legal process.

    (a) Refer to Sec.  1010.630 of this Chapter.
    (b) [Reserved]


Sec.  1023.640  [Reserved]


Sec.  1023.670  Summons or subpoena of foreign bank records; 
termination of correspondent relationship.

    (a) Refer to Sec.  1010.670 of this Chapter.
    (b) [Reserved]

PART 1024--RULES FOR MUTUAL FUNDS

Subpart A--Definitions
Sec.
1024.100 Definitions.
Subpart B--Programs
1024.200 General.
1024.210 Anti-money laundering programs for mutual funds.
1024.220 Customer identification programs for mutual funds.
Subpart C--Reports Required To Be Made By Mutual Funds
1024.300 General.
1024.310 Reports of transactions in currency.
1024.311 Filing obligations.
1024.312 Identification required.
1024.313 Aggregation.
1024.314 Structured transactions.
1024.315 Exemptions
1024.320 Reports by mutual funds of suspicious transactions.
Subpart D--Records Required To Be Maintained By Mutual Funds
1024.400 General.
1024.410 Recordkeeping.
Subpart E--Special Information Sharing Procedures To Deter Money 
Laundering and Terrorist Activity
1024.500 General.
1024.520 Special information sharing procedures to deter money 
laundering and terrorist activity for mutual funds.
1024.530 [Reserved]
1024.540 Voluntary information sharing among financial institutions.
Subpart F--Special Standards of Diligence; Prohibitions, and Special 
Measures for Mutual Funds
1024.600 General.
1024.610 Due diligence programs for correspondent accounts for 
foreign financial institutions.
1024.620 Due diligence programs for private banking accounts.
1024.630 Prohibition on correspondent accounts for foreign shell 
banks; records

[[Page 65864]]

concerning owners of foreign banks and agents for service of legal 
process.
1024.640 [Reserved]
1024.670 [Reserved]

Subpart A--Definitions


Sec.  1024.100  Definitions.

    Refer to Sec.  1010.100 of this Chapter for general definitions not 
noted herein. To the extent there is a differing definition in Sec.  
1010.100 of this Chapter, the definition in this Section is what 
applies to Part 1024. Unless otherwise indicated, for purposes of this 
Part:
    (a) Account. For purposes of Sec.  1024.220:
    (1) 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.
    (2) Account does not include:
    (i) An account that a mutual fund acquires through any acquisition, 
merger, purchase of assets, or assumption of liabilities; or
    (ii) An account opened for the purpose of participating in an 
employee benefit plan established under the Employee Retirement Income 
Security Act of 1974.
    (b) Commission means the United States Securities and Exchange 
Commission.
    (c) Customer. For purposes of Sec.  1024.220:
    (1) Customer means:
    (i) A person that opens a new account; and
    (ii) An individual who opens a new account for:
    (A) An individual who lacks legal capacity, such as a minor; or
    (B) An entity that is not a legal person, such as a civic club.
    (2) Customer does not include:
    (i) A financial institution regulated by a Federal functional 
regulator or a bank regulated by a State bank regulator;
    (ii) A person described in Sec.  1020.315(b)(2) through (4) of this 
Chapter; or
    (iii) 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.
    (d) Financial institution is defined at 31 U.S.C. 5312(a)(2) and 
(c)(1).

Subpart B--Programs


Sec.  1024.200  General.

    Mutual funds are subject to the program requirements set forth and 
cross referenced in this subpart. Mutual funds should also refer to 
Subpart B of Part 1010 of this Chapter for program requirements 
contained in that subpart which apply to mutual funds.


Sec.  1024.210  Anti-money laundering programs for mutual funds.

    (a) 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.
    (b) 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.


Sec.  1024.220  Customer identification programs for mutual funds.

    (a) Customer identification program: minimum requirements--(1) In 
general. A 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 (a)(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 (a)(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 (a)(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 (a)(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

[[Page 65865]]

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 (a)(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 (a)(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
    (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 (a)(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 (a) of 
this section.
    (i) Required records. At a minimum, the record must include:
    (A) All identifying information about a customer obtained under 
paragraph (a)(2)(i) of this section;
    (B) A description of any document that was relied on under 
paragraph (a)(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 
(a)(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 (a)(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 (a)(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 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 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 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

[[Page 65866]]

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.
    (b) 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.
    (c) Other requirements unaffected. Nothing in this section relieves 
a mutual fund of its obligation to comply with any other provision in 
this chapter, including provisions concerning information that must be 
obtained, verified, or maintained in connection with any account or 
transaction.

Subpart C--Reports Required To Be Made By Mutual Funds


Sec.  1024.300  General.

    Mutual funds are subject to the reporting requirements set forth 
and cross referenced in this subpart. Mutual funds should also refer to 
Subpart C of Part 1010 of this Chapter for reporting requirements 
contained in that subpart which apply to mutual funds.


Sec.  1024.310  Reports of transactions in currency.

    The reports of transactions in currency requirements for mutual 
funds are located in subpart C of Part 1010 of this Chapter and this 
subpart.


Sec.  1024.311  Filing obligations.

    Refer to Sec.  1010.311 of this Chapter for reports of transactions 
in currency filing obligations for mutual funds.


Sec.  1024.312  Identification required.

    Refer to Sec.  1010.312 of this Chapter for identification 
requirements for reports of transactions in currency filed by mutual 
funds.


Sec.  1024.313  Aggregation.

    Refer to Sec.  1010.313 of this Chapter for reports of transactions 
in currency aggregation requirements for mutual funds.


Sec.  1024.314  Structured transactions.

    Refer to Sec.  1010.314 of this Chapter for rules regarding 
structured transactions for mutual funds.


Sec.  1024.315  Exemptions.

    Refer to Sec.  1010.315 of this Chapter for exemptions from the 
obligation to file reports of transactions in currency for mutual 
funds.


Sec.  1024.320  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 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 chapter or any other regulations 
promulgated under the Bank Secrecy Act;
    (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 
chapter. 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

[[Page 65867]]

immediately notify by telephone an appropriate law enforcement 
authority in 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.  1023.320(g) of this chapter 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 chapter (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.  
1023.320(g) of this chapter), 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 chapter.
    (g) Applicability date. This section applies to transactions 
occurring after October 31, 2006.

Subpart D--Records Required To Be Maintained By Mutual Funds


Sec.  1024.400  General.

    Mutual funds are subject to the recordkeeping requirements set 
forth and cross referenced in this subpart. Mutual funds should also 
refer to Subpart D of Part 1010 of this Chapter for recordkeeping 
requirements contained in that subpart which apply to mutual funds.


Sec.  1024.410  Recordkeeping.

    Refer to Sec.  1010.410 of this Chapter.

Subpart E--Special Information Sharing Procedures To Deter Money 
Laundering and Terrorist Activity


Sec.  1024.500  General.

    Mutual funds are subject to the special information sharing 
procedures to deter money laundering and terrorist activity 
requirements set forth and cross referenced in this subpart. Mutual 
funds should also refer to Subpart E of Part 1010 of this Chapter for 
special information sharing procedures to deter money laundering and 
terrorist activity contained in that subpart which apply to mutual 
funds.


Sec.  1024.520  Special information sharing procedures to deter money 
laundering and terrorist activity for mutual funds.

    (a) Refer to Sec.  1010.520 of this Chapter.
    (b) [Reserved]


Sec.  1024.530  [Reserved]


Sec.  1024.540  Voluntary information sharing among financial 
institutions.

    (a) Refer to Sec.  1010.540 of this Chapter.
    (b) [Reserved]

Subpart F--Special Standards of Diligence; Prohibitions; and 
Special Measures for Mutual Funds


Sec.  1024.600  General.

    Mutual funds are subject to the special standards of diligence; 
prohibitions; and special measures requirements set forth and cross 
referenced in this subpart. Mutual funds should also refer to Subpart F 
of Part 1010 of this Chapter for special standards of diligence; 
prohibitions; and special measures contained in that subpart which 
apply to mutual funds.


Sec.  1024.610  Due diligence programs for correspondent accounts for 
foreign financial institutions.

    (a) Refer to Sec.  1010.610 of this Chapter.
    (b) [Reserved]


Sec.  1024.620  Due diligence programs for private banking accounts.

    (a) Refer to Sec.  1010.620 of this Chapter.
    (b) [Reserved]


Sec.  1024.630  Prohibition on correspondent accounts for foreign shell 
banks; records concerning owners of foreign banks and agents for 
service of legal process.

    (a) Refer to Sec.  1010.630 of this Chapter.
    (b) [Reserved]


Sec.  1024.640  [Reserved]


Sec.  1024.670  [Reserved]

PART 1025--RULES FOR INSURANCE COMPANIES

Subpart A--Definitions
Sec.
1025.100 Definitions.
Subpart B--Programs
1025.200 General.
1025.210 Anti-money laundering programs for insurance companies.
Subpart C--Reports Required To Be Made By Insurance Companies
1025.300 General.
1025.310 [Reserved]
1025.315 [Reserved]

[[Page 65868]]

1025.320 Reports by insurance companies of suspicious transactions.
1025.330 Reports relating to currency in excess of $10,000 received 
in a trade or business.
Subpart D--Records Required To Be Maintained By Insurance Companies
1025.400 General.
1025.410 Recordkeeping.
Subpart E--Special Information Sharing Procedures To Deter Money 
Laundering and Terrorist Activity
1025.500 General.
1025.520 Special information sharing procedures to deter money 
laundering and terrorist activity for insurance companies.
1025.530 [Reserved]
1025.540 Voluntary information sharing among financial institutions.
Subpart F--Special Standards of Diligence; Prohibitions, and Special 
Measures for Insurance Companies
1025.600 [Reserved]
1025.610 [Reserved]
1025.620 [Reserved]
1025.630 [Reserved]
1025.640 [Reserved]
1025.670 [Reserved]

Subpart A--Definitions


Sec.  1025.100  Definitions.

    Refer to Sec.  1010.100 of this Chapter for general definitions not 
noted herein. To the extent there is a differing definition in Sec.  
1010.100 of this Chapter, the definition in this Section is what 
applies to Part 1025. Unless otherwise indicated, for purposes of this 
Part:
    (a) 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.
    (b) Covered product means:
    (1) A permanent life insurance policy, other than a group life 
insurance policy;
    (2) An annuity contract, other than a group annuity contract; or
    (3) Any other insurance product with features of cash value or 
investment.
    (c) Group annuity contract means a master contract providing 
annuities to a group of persons under a single contract.
    (d) 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.
    (e) 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.
    (f) Insurance broker means a person who, by acting as the 
customer's representative, arranges and/or services covered products on 
behalf of the customer.
    (g) Insurance company or insurer. (1) Except as provided in 
paragraph (g)(2) 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.
    (2) The term ``insurance company'' or ``insurer'' does not include 
an insurance agent or insurance broker.
    (h) 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.

Subpart B--Programs


Sec.  1025.200  General.

    Insurance companies are subject to the program requirements set 
forth and cross referenced in this subpart. Insurance companies should 
also refer to Subpart B of Part 1010 of this Chapter for program 
requirements contained in that subpart which apply to insurance 
companies.


Sec.  1025.210  Anti-money laundering programs for insurance companies.

    (a) In general. 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.
    (b) Minimum requirements. At a minimum, the program required by 
paragraph (a) 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 chapter, 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 (b)(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 (b)(2) of this section.
    (c) 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.  1023.210 of this Chapter and complies with such program.

[[Page 65869]]

    (d) 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 chapter.

Subpart C--Reports Required To Be Made By Insurance Companies


Sec.  1025.300  General.

    Insurance companies are subject to the reporting requirements set 
forth and cross referenced in this subpart. Insurance companies should 
also refer to Subpart C of Part 1010 of this Chapter for reporting 
requirements contained in that subpart which apply to insurance 
companies.


Sec.  1025.310  [Reserved]


Sec.  1025.315  [Reserved]


Sec.  1025.320  Reports by insurance companies of suspicious 
transactions.

    (a) 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 (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 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 chapter or of any other regulations 
promulgated under the Bank Secrecy Act;
    (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
    (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 
chapter. 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.  1024.320(a)(1) of this Chapter shall file reports of 
suspicious transactions pursuant to Sec.  1024.320 of this Chapter.
    (b) 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 (d) 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.
    (c) 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.
    (d) 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.
    (e) 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 chapter (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. 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

[[Page 65870]]

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 1025.320 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).
    (f) 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 chapter.
    (g) 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.  1023.320 of this Chapter.
    (h) Applicability date. This section applies to transactions 
occurring after May 2, 2006.


Sec.  1025.330  Reports relating to currency in excess of $10,000 
received in a trade or business.

    Refer to Sec.  1010.330 of this Chapter for rules regarding the 
filing of reports relating to currency in excess of $10,000 received by 
insurance companies.

Subpart D--Records Required To Be Maintained By Insurance Companies


Sec.  1025.400  General.

    Insurance companies are subject to the recordkeeping requirements 
set forth and cross referenced in this subpart. Insurance companies 
should also refer to Subpart D of Part 1010 of this Chapter for 
recordkeeping requirements contained in that subpart which apply to 
insurance companies.


Sec.  1025.410  Recordkeeping.

    Refer to Sec.  1010.410.

Subpart E--Special Information Sharing Procedures To Deter Money 
Laundering and Terrorist Activity


Sec.  1025.500  General.

    Insurance companies are subject to the special information sharing 
procedures to deter money laundering and terrorist activity 
requirements set forth and cross referenced in this subpart. Insurance 
companies should also refer to Subpart E of Part 1010 of this Chapter 
for special information sharing procedures to deter money laundering 
and terrorist activity contained in that subpart which apply to 
insurance companies.


Sec.  1025.520  Special information sharing procedures to deter money 
laundering and terrorist activity for insurance companies.

    (a) Refer to Sec.  1010.520 of this Chapter.
    (b) [Reserved]


Sec.  1025.530  [Reserved]


Sec.  1025.540  Voluntary information sharing among financial 
institutions.

    (a) Refer to Sec.  1010.540 of this Chapter.
    (b) [Reserved]

Subpart F--Special Standards of Diligence; Prohibitions; and 
Special Measures for Insurance Companies


Sec.  1025.600  [Reserved]


Sec.  1025.610  [Reserved]


Sec.  1025.620  [Reserved]


Sec.  1025.630  [Reserved]


Sec.  1025.640  [Reserved]


Sec.  1025.670  [Reserved]

PART 1026--RULES FOR FUTURES COMMISSION MERCHANTS AND INTRODUCING 
BROKERS IN COMMODITIES

Subpart A--Definitions
Sec.
1026.100 Definitions.
Subpart B--Programs
1026.200 General.
1026.210 Anti-money laundering program requirements for futures 
commission merchants and introducing brokers in commodities.
1026.220 Customer identification program requirements for futures 
commission merchants and introducing brokers.
Subpart C--Reports Required To Be Made By Futures Commission Merchants 
and Introducing Brokers in Commodities
1026.300 General.
1026.310 Reports of transactions in currency.
1026.315 Exemptions.
1026.320 Reports by futures commission merchants and introducing 
brokers in commodities of suspicious transactions.
Subpart D--Records Required To Be Maintained By Futures Commission 
Merchants and Introducing Brokers in Commodities
1026.400 General.
1026.410 Recordkeeping.
Subpart E--Special Information Sharing Procedures To Deter Money 
Laundering and Terrorist Activity
1026.500 General.
1026.520 Special information sharing procedures to deter money 
laundering and terrorist activity for futures commission merchants 
and introducing brokers in commodities.
1026.530 [Reserved]
1026.540 Voluntary information sharing among financial institutions.
Subpart F--Special Standards of Diligence; Prohibitions, and Special 
Measures for Futures Commission Merchants and Introducing Brokers in 
Commodities
1026.600 General.
1026.610 Due diligence programs for correspondent accounts for 
foreign financial institutions.
1026.620 Due diligence programs for private banking accounts.
1026.630 Prohibition on correspondent accounts for foreign shell 
banks; records concerning owners of foreign banks and agents for 
service of legal process.
1026.640 [Reserved]
1026.670 Summons or subpoena of foreign bank records; Termination of 
correspondent relationship.

Subpart A--Definitions


Sec.  1026.100  Definitions.

    Refer to Sec.  1010.100 of this Chapter for general definitions not 
noted herein. To the extent there is a differing definition in Sec.  
1010.100 of this Chapter, the definition in this Section is what 
applies to Part 1026. Unless otherwise indicated, for the purposes of 
this Part:
    (a) Account. For purposes of Sec.  1026.220:
    (1) 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 any contract of sale of a commodity for future delivery, or 
options on a commodity.
    (2) Account does not include:
    (i) An account that the futures commission merchant acquires 
through

[[Page 65871]]

any acquisition, merger, purchase of assets, or assumption of 
liabilities; or
    (ii) An account opened for the purpose of participating in an 
employee benefit plan established under the Employee Retirement Income 
Security Act of 1974.
    (b) 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)).
    (c) 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)).
    (d) Customer. For purposes of Sec.  1026.220:
    (1) Customer means:
    (i) A person that opens a new account with a futures commission 
merchant; and
    (ii) An individual who opens a new account with a futures 
commission merchant for:
    (A) An individual who lacks legal capacity; or
    (B) An entity that is not a legal person.
    (2) Customer does not include:
    (i) A financial institution regulated by a Federal functional 
regulator or a bank regulated by a state bank regulator;
    (ii) A person described in Sec.  1020.315(b)(2) through (4) of this 
Chapter; or
    (iii) 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.
    (3) 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.
    (e) Financial institution is defined at 31 U.S.C. 5312(a)(2) and 
(c)(1).
    (f) Futures commission merchant means any person registered or 
required to be registered as a futures commission merchant with the 
Commodity Futures Trading Commission (``CFTC'') 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)).
    (g) Introducing broker means any person registered or required to 
be registered as an introducing broker with the CFTC 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)).
    (h) Option means an agreement, contract or transaction described in 
Section 1a(26) of the Commodity Exchange Act (7 U.S.C. 1a(26)).

Subpart B--Programs


Sec.  1026.200  General.

    Futures commission merchants and introducing brokers in commodities 
are subject to the program requirements set forth and cross referenced 
in this subpart. Futures commission merchants and introducing brokers 
in commodities should also refer to Subpart B of Part 1010 of this 
Chapter for program requirements contained in that subpart which apply 
to futures commission merchants and introducing brokers in commodities.


Sec.  1026.210  Anti-money laundering program requirements for futures 
commission merchants and introducing brokers in commodities.

    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:
    (a) The financial institution complies with the requirements of 
Sec. Sec.  1010.610 and 1010.620 of this Chapter and any applicable 
regulation of its Federal functional regulator governing the 
establishment and implementation of anti-money laundering programs; and
    (b)(1) 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
    (2) The rules, regulations, or requirements of the self-regulatory 
organization have been approved, if required, by the appropriate 
Federal functional regulator.


Sec.  1026.220  Customer identification programs for futures commission 
merchants and introducing brokers.

    (a) 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 (a)(1) through (a)(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 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 (a)(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 (a)(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 (a)(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.


[[Page 65872]]


    (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 (a)(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 (a)(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 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 (a)(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 (a) of this section.
    (i) Required records. At a minimum, the record must include:
    (A) All identifying information about a customer obtained under 
paragraph (a)(2)(i) of this section;
    (B) A description of any document that was relied on under 
paragraph (a)(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 
(a)(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 
(a)(3)(i)(A) of this section for five years after the account is closed 
and the records made under paragraphs (a)(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 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,

[[Page 65873]]

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.
    (b) Exemptions. The CFTC, with the concurrence of the Secretary, 
may by order or regulation exempt any futures commission merchant or 
introducing broker that registers with the CFTC or any type of account 
from the requirements of this section. In issuing such exemptions, the 
CFTC 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.
    (c) 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 chapter, including 
provisions concerning information that must be obtained, verified, or 
maintained in connection with any account or transaction.

Subpart C--Reports Required To Be Made by Futures Commission 
Merchants and Introducing Brokers in Commodities


Sec.  1026.300  General.

    Futures commission merchants and introducing brokers in commodities 
are subject to the reporting requirements set forth and cross 
referenced in this subpart. Futures commission merchants and 
introducing brokers in commodities should also refer to Subpart C of 
Part 1010 of this Chapter for reporting requirements contained in that 
subpart which apply to futures commission merchants and introducing 
brokers in commodities.


Sec.  1026.310  Reports of transactions in currency.

    The reports of transactions in currency requirements for futures 
commission merchants and introducing brokers in commodities are located 
in subpart C of Part 1010 of this Chapter and this subpart.


Sec.  1026.315  Exemptions.

    Refer to Sec.  1010.315 of this Chapter for exemptions from the 
obligation to file reports of transactions in currency for futures 
commission merchants and introducing brokers in commodities.


Sec.  1026.320  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 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;
    (ii) Is designed, whether through structuring or other means, to 
evade any requirements of this chapter or of any other regulations 
promulgated under the Bank Secrecy Act;
    (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 by 
Securities and Futures Industries (``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

[[Page 65874]]

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, 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 chapter, 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 Bank Secrecy Act. Reports filed under 
this section or Sec.  1023.320 of this Chapter (including any 
supporting documentation), and documentation demonstrating reliance on 
an exception under paragraph (c) of this section or Sec.  1023.320 of 
this Chapter, 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.  1023.320 of this Chapter. Failure to satisfy the 
requirements of this section may constitute a violation of the 
reporting rules of the BSA or of this chapter.
    (h) Applicability date. This section applies to transactions 
occurring after May 18, 2004.

Subpart D--Records Required To Be Maintained By Futures Commission 
Merchants and Introducing Brokers in Commodities


Sec.  1026.400  General.

    Futures commission merchants and introducing brokers in commodities 
are subject to the recordkeeping requirements set forth and cross 
referenced in this subpart. Futures commission merchants and 
introducing brokers in commodities should also refer to Subpart D of 
Part 1010 of this Chapter for recordkeeping requirements contained in 
that subpart which apply to futures commission merchants and 
introducing brokers in commodities.


Sec.  1026.410  Recordkeeping.

    Refer to Sec.  1010.410 of this Chapter.

Subpart E--Special Information Sharing Procedures To Deter Money 
Laundering and Terrorist Activity


Sec.  1026.500  General.

    Futures commission merchants and introducing brokers in commodities 
are subject to the special information sharing procedures to deter 
money laundering and terrorist activity requirements set forth and 
cross referenced in this subpart. Futures commission merchants and 
introducing brokers in commodities should also refer to Subpart E of 
Part 1010 of this Chapter for special information sharing procedures to 
deter money laundering and terrorist activity contained in that subpart 
which apply to futures commission merchants and introducing brokers in 
commodities.


Sec.  1026.520  Special information sharing procedures to deter money 
laundering and terrorist activity for futures commission merchants and 
introducing brokers in commodities.

    (a) Refer to Sec.  1010.520 of this Chapter.
    (b) [Reserved]


Sec.  1026.530  [Reserved]


Sec.  1026.540  Voluntary information sharing among financial 
institutions.

    (a) Refer to Sec.  1010.540 of this Chapter.
    (b) [Reserved]

[[Page 65875]]

Subpart F--Special Standards of Diligence; Prohibitions; and 
Special Measures for Futures Commission Merchants and Introducing 
Brokers in Commodities


Sec.  1026.600  General.

    Futures commission merchants and introducing brokers in commodities 
are subject to the special standards of diligence; prohibitions; and 
special measures requirements set forth and cross referenced in this 
subpart. Futures commission merchants and introducing brokers in 
commodities should also refer to Subpart F of Part 1010 of this Chapter 
for special standards of diligence; prohibitions; and special measures 
contained in that subpart which apply to futures commission merchants 
and introducing brokers in commodities.


Sec.  1026.610  Due diligence programs for correspondent accounts for 
foreign financial institutions.

    (a) Refer to Sec.  1010.610 of this Chapter.
    (b) [Reserved]


Sec.  1026.620  Due diligence programs for private banking accounts.

    (a) Refer to Sec.  1010.620 of this Chapter.
    (b) [Reserved]


Sec.  1026.630  Prohibition on correspondent accounts for foreign shell 
banks; records concerning owners of foreign banks and agents for 
service of legal process.

    (a) Refer to Sec.  1010.630 of this Chapter.
    (b) [Reserved]


Sec.  1026.640  [Reserved]


Sec.  1026.670  Summons or subpoena of foreign bank records; 
Termination of correspondent relationship.

    (a) Refer to Sec.  1010.670 of this Chapter.
    (b) [Reserved]

PART 1027--RULES FOR DEALERS IN PRECIOUS METALS, PRECIOUS STONES, 
OR JEWELS

Subpart A--Definitions
Sec.
1027.100 Definitions.
Subpart B--Programs
1027.200 General.
1027.210 Anti-money laundering programs for dealers in precious 
metals, precious stones, or jewels.
Subpart C--Reports Required To Be Made By Dealers in Precious Metals, 
Precious Stones, or Jewels
1027.300 General.
1027.310 [Reserved]
1027.315 [Reserved]
1027.320 [Reserved]
1027.330 Reports relating to currency in excess of $10,000 received 
in a trade or business.
Subpart D--Records Required To Be Maintained By Dealers in Precious 
Metals, Precious Stones, or Jewels
1027.400 General.
1027.410 Recordkeeping.
Subpart E--Special Information Sharing Procedures To Deter Money 
Laundering and Terrorist Activity
1027.500 General.
1027.520 Special information sharing procedures to deter money 
laundering and terrorist activity for dealers in precious metals, 
precious stones, or jewels.
1027.530 [Reserved]
1027.540 Voluntary information sharing among financial institutions.
Subpart F--Special Standards of Diligence; Prohibitions, and Special 
Measures for Dealers in Precious Metals, Precious Stones, or Jewels
1027.600 [Reserved]
1027.610 [Reserved]
1027.620 [Reserved]
1027.630 [Reserved]
1027.640 [Reserved]
1027.670 [Reserved]

Subpart A--Definitions


Sec.  1027.100  Definitions.

    Refer to Sec.  1010.100 of this Chapter for general definitions not 
noted herein. To the extent there is a differing definition in Sec.  
1010.100 of this Chapter, the definition in this Section is what 
applies to Part 1027. Unless otherwise indicated, for purposes of this 
Part:
    (a) Covered goods means:
    (1) Jewels (as defined in paragraph (c) of this section);
    (2) Precious metals (as defined in paragraph (d) of this section);
    (3) Precious stones (as defined in paragraph (e) of this section); 
and
    (4) 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;
    (b) Dealer. (1) Except as provided in paragraphs (b)(2) and (b)(3) 
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:
    (i) Purchased more than $50,000 in covered goods; and
    (ii) Received more than $50,000 in gross proceeds from the sale of 
covered goods.
    (2) For purposes of this section, the term ``dealer'' does not 
include:
    (i) A retailer (as defined in paragraph (f) 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
    (ii) 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).
    (3) For purposes of paragraph (b) 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.
    (4) For purposes of paragraph (b) of this section and Sec.  
1027.210(a), 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.
    (5) For purposes of applying the $50,000 thresholds in paragraphs 
(b)(1) and (b)(2)(i) of this section to finished goods defined in 
paragraph (a)(4) 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.
    (c) Jewel means an organic substance with gem quality market-
recognized beauty, rarity, and value, and includes pearl, amber, and 
coral.
    (d) Precious metal means:
    (1) Gold, iridium, osmium, palladium, platinum, rhodium, ruthenium, 
or silver, having a level of purity of 500 or more parts per thousand; 
and
    (2) An alloy containing 500 or more parts per thousand, in the 
aggregate, of two or more of the metals listed in paragraph (d)(1) of 
this section.
    (e) 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.
    (f) Retailer means a person engaged within the United States in the 
business of sales primarily to the public of covered goods.

[[Page 65876]]

Subpart B--Programs


Sec.  1027.200  General.

    Dealers in precious metals, precious stones, or jewels are subject 
to the program requirements set forth and cross referenced in this 
subpart. Dealers in precious metals, precious stones, or jewels should 
also refer to Subpart B of Part 1010 of this Chapter for program 
requirements contained in that subpart which apply to dealers in 
precious metals, precious stones, or jewels.


Sec.  1027.210  Anti-money laundering programs for dealers in precious 
metals, precious stones, or jewels.

    (a) 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 
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 Sec.  1027.100(b)(2)(i), the anti-money laundering 
compliance program required of the retailer under this paragraph need 
only address such purchases.
    (b) 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 chapter.
    (i) For purposes of making the risk assessment required by 
paragraph (b)(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 chapter, 
and further guidance issued by the Department of the Treasury; and
    (iii) Appropriate personnel are trained in accordance with 
paragraph (b)(3) of this section.
    (3) Provide for on-going education and training of appropriate 
persons concerning their responsibilities under the program.
    (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 (b)(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 (b)(2) of this section 
or a person involved in the operation of the program.
    (c) Implementation 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.

Subpart C--Reports Required To Be Made by Dealers in Precious 
Metals, Precious Stones, or Jewels


Sec.  1027.300  General.

    Dealers in precious metals, precious stones, or jewels are subject 
to the reporting requirements set forth and cross referenced in this 
subpart. Dealers in precious metals, precious stones, or jewels should 
also refer to Subpart C of Part 1010 of this Chapter for reporting 
requirements contained in that subpart which apply to dealers in 
precious metals, precious stones, or jewels.


Sec.  1027.310  [Reserved]


Sec.  1027.315  [Reserved]


Sec.  1027.320  [Reserved]


Sec.  1027.330  Reports relating to currency in excess of $10,000 
received in a trade or business.

    Refer to Sec.  1010.330 of this Chapter for rules regarding the 
filing of reports relating to currency in excess of $10,000 received by 
dealers in precious metals, precious stones, or jewels.

Subpart D--Records Required To Be Maintained By Dealers in Precious 
Metals, Precious Stones, or Jewels


Sec.  1027.400  General.

    Dealers in precious metals, precious stones, or jewels are subject 
to the recordkeeping requirements set forth and cross referenced in 
this subpart.

[[Page 65877]]

Dealers in precious metals, precious stones, or jewels should also 
refer to Subpart D of Part 1010 of this Chapter for recordkeeping 
requirements contained in that subpart which apply to dealers in 
precious metals, precious stones, or jewels.


Sec.  1027.410  Recordkeeping.

    Refer to Sec.  1010.410 of this Chapter.

Subpart E--Special Information Sharing Procedures To Deter Money 
Laundering and Terrorist Activity


Sec.  1027.500  General.

    Dealers in precious metals, precious stones, or jewels are subject 
to the special information sharing procedures to deter money laundering 
and terrorist activity requirements set forth and cross referenced in 
this subpart. Dealers in precious metals, precious stones, or jewels 
should also refer to Subpart E of Part 1010 of this Chapter for special 
information sharing procedures to deter money laundering and terrorist 
activity contained in that subpart which apply to dealers in precious 
metals, precious stones, or jewels.


Sec.  1027.520  Special information sharing procedures to deter money 
laundering and terrorist activity for dealers in precious metals, 
precious stones, or jewels.

    (a) Refer to Sec.  1010.520 of this Chapter.
    (b) [Reserved]


Sec.  1027.530  [Reserved]


Sec.  1027.540  Voluntary information sharing among financial 
institutions.

    (a) Refer to Sec.  1010.540 of this Chapter.
    (b) [Reserved]

Subpart F--Special Standards of Diligence; Prohibitions; and 
Special Measures for Dealers in Precious Metals, Precious Stones, 
or Jewels


Sec.  1027.600  [Reserved]


Sec.  1027.610  [Reserved]


Sec.  1027.620  [Reserved]


Sec.  1027.630  [Reserved]


Sec.  1027.640  [Reserved]


Sec.  1027.670  [Reserved]

PART 1028--RULES FOR OPERATORS OF CREDIT CARD SYSTEMS

Subpart A--Definitions
Sec.
1028.100 Definitions.
Subpart B--Programs
1028.200 General.
1028.210 Anti-money laundering programs for operators of credit card 
systems.
Subpart C--Reports Required To Be Made by Operators of Credit Card 
Systems
1028.300 General.
1028.310 [Reserved]
1028.315 [Reserved]
1028.320 [Reserved]
1028.330 Reports relating to currency in excess of $10,000 received 
in a trade or business.
Subpart D--Records Required To Be Maintained by Operators of Credit 
Card Systems
1028.400 General.
1028.410 Recordkeeping.
Subpart E--Special Information Sharing Procedures To Deter Money 
Laundering and Terrorist Activity
1028.500 General.
1028.520 Special information sharing procedures to deter money 
laundering and terrorist activity for operators of credit card 
systems.
1028.530 [Reserved]
1028.540 Voluntary information sharing among financial institutions.
Subpart F--Special Standards of Diligence; Prohibitions, and Special 
Measures for Operators of Credit Card Systems
1028.600 [Reserved]
1028.610 [Reserved]
1028.620 [Reserved]
1028.630 [Reserved]
1028.640 [Reserved]
1028.670 [Reserved]

Subpart A--Definitions


Sec.  1028.100  Definitions.

    Refer to Sec.  1010.100 of this Chapter for general definitions not 
noted herein. To the extent there is a differing definition in Sec.  
1010.100 of this Chapter, the definition in this Section is what 
applies to Part 1028. Unless otherwise indicated, for purposes of this 
Part:
    (a) 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.
    (b) 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).
    (c) 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:
    (1) 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.
    (2) The term foreign bank does not include:
    (i) A U.S. agency or branch of a foreign bank; and
    (ii) 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.
    (d) Issuing institution means a person authorized by the operator 
of a credit card system to issue the operator's credit card.
    (e) 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 States or not) to be an issuing or acquiring institution for 
the operator's credit card.
    (f) Operator's credit card means a credit card capable of being 
used in the United States that:
    (1) Has been issued by an issuing institution; and
    (2) Can be used in the operator's credit card system.

Subpart B--Programs


Sec.  1028.200  General.

    Operators of credit card systems are subject to the program 
requirements set forth and cross referenced in this subpart. Operators 
of credit card systems should also refer to Subpart B of Part 1010 of 
this Chapter for program requirements contained in that subpart which 
apply to operators of credit card systems.


Sec.  1028.210  Anti-money laundering programs for operators of credit 
card systems.

    (a) 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.
    (b) Minimum requirements. At a minimum, the program must:

[[Page 65878]]

    (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 (b)(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 Sec.  1010.605(g) and (n) of this Chapter;
    (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;
    (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 chapter;
    (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 this chapter, and further guidance issued by the 
Department of the Treasury; and
    (iii) Appropriate personnel are trained in accordance with 
paragraph (b)(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 (b)(2) of this section or a person 
involved in the operation of the program.

Subpart C--Reports Required To Be Made by Operators of Credit Card 
Systems


Sec.  1028.300  General.

    Operators of credit card systems are subject to the reporting 
requirements set forth and cross referenced in this subpart. Operators 
of credit card systems should also refer to Subpart C of Part 1010 of 
this Chapter for reporting requirements contained in that subpart which 
apply to operators of credit card systems.


Sec.  1028.310  [Reserved]


Sec.  1028.315  [Reserved]


Sec.  1028.320  [Reserved]


Sec.  1028.330  Reports relating to currency in excess of $10,000 
received in a trade or business.

    Refer to Sec.  1010.330 of this Chapter for rules regarding the 
filing of reports relating to currency in excess of $10,000 received by 
operators of credit card systems.

Subpart D--Records Required To Be Maintained By Operators of Credit 
Card Systems


Sec.  1028.400  General.

    Operators of credit card systems are subject to the recordkeeping 
requirements set forth and cross referenced in this subpart. Operators 
of credit card systems should also refer to Subpart D of Part 1010 of 
this Chapter for recordkeeping requirements contained in that subpart 
which apply to operators of credit card systems.


Sec.  1028.410  Recordkeeping.

    Refer to Sec.  1010.410 of this Chapter.

Subpart E--Special Information Sharing Procedures To Deter Money 
Laundering and Terrorist Activity


Sec.  1028.500  General.

    Operators of credit card systems are subject to the special 
information sharing procedures to deter money laundering and terrorist 
activity requirements set forth and cross referenced in this subpart. 
Operators of credit card systems should also refer to Subpart E of Part 
1010 of this Chapter for special information sharing procedures to 
deter money laundering and terrorist activity contained in that subpart 
which apply to operators of credit card systems.


Sec.  1028.520  Special information sharing procedures to deter money 
laundering and terrorist activity for operators of credit card systems.

    (a) Refer to Sec.  1010.520.
    (b) [Reserved]


Sec.  1028.530  [Reserved]


Sec.  1028.540  Voluntary information sharing among financial 
institutions.

    (a) Refer to Sec.  1010.540 of this Chapter.
    (b) [Reserved]

[[Page 65879]]

Subpart F--Special Standards of Diligence; Prohibitions; and 
Special Measures for Operators of Credit Card Systems


Sec.  1028.600  [Reserved]


Sec.  1028.610  [Reserved]


Sec.  1028.620  [Reserved]


Sec.  1028.630  [Reserved]


Sec.  1028.640  [Reserved]


Sec.  1028.670  [Reserved]

PARTS 1029-1099 [RESERVED]

    Dated: October 7, 2010.
James H. Freis, Jr.,
Director, Financial Crimes Enforcement Network.
[FR Doc. 2010-25914 Filed 10-25-10; 8:45 am]
BILLING CODE 4810-02-P