[Federal Register Volume 76, Number 180 (Friday, September 16, 2011)]
[Notices]
[Pages 57799-57801]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-23841]


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DEPARTMENT OF THE TREASURY

Financial Crimes Enforcement Network


Agency Information Collection Activities; Proposal That 
Electronic Filing of Bank Secrecy Act (BSA) Reports Be Required; 
Comment Request

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

ACTION: Notice and request for comments.

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SUMMARY: FinCEN is proposing to require electronic filing of certain 
Bank Secrecy Act (BSA) reports not later than June 30, 2012. This 
requirement will significantly enhance the quality of our electronic 
data, improve our analytic capabilities in supporting law enforcement 
requirements and result in significant reduction in real costs to the 
United States Government and ultimately to U.S. taxpayers. 
Specifically, we propose mandatory electronic submission of all BSA 
reports excluding the Report of International Transportation of 
Currency or Monetary Instruments (CMIR).\1\
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    \1\ All CMIRs are filed with the Department of Homeland 
Security's Customs and Border Protection (CBP) at the port of entry/
exit or mailed to the Commissioner of Customs in Washington, DC. 
There are no electronic filing capabilities at the ports. A CBP 
contractor keys the data on the completed form into a data tape that 
is electronically uploaded to the BSA database. FinCEN receives no 
paper filed CMIRs.

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DATES: Comments should be submitted on or before November 15, 2011.

ADDRESSES: Written comments should be submitted to: Regulatory Policy 
and Programs Division, Financial Crimes Enforcement Network, Department 
of the Treasury, P.O. Box 39, Vienna, Virginia 22183, Attention: PRA 
Comments--BSA Required Electronic Filing. BSA Required Electronic 
Filing comments also may be submitted by electronic mail to the 
following Internet address: [email protected], with the caption, 
``Attention: BSA Required Electronic Filing,'' in the body of the text.
    Inspection of comments. Comments may be inspected, between 10 a.m. 
and 4 p.m., in the FinCEN reading room in Vienna, VA. Persons wishing 
to inspect the comments submitted must request an appointment with the 
Disclosure Officer by telephoning (703) 905-5034 (not a toll free 
call).

FOR FURTHER INFORMATION CONTACT: The FinCEN Regulatory Helpline at 800-
949-2732, select option 7.

SUPPLEMENTARY INFORMATION:
    Title: Bank Secrecy Act, Reporting Forms, (31 CFR chapter X).
    Abstract: The statute generally referred to as the ``Bank Secrecy 
Act,'' Titles I and II of Public Law 91-508, as amended, codified at 12 
U.S.C. 1829b, 12 U.S.C. 1951-1959, and 31 U.S.C. 5311-5332, authorizes 
the Secretary of the Treasury (Secretary), inter alia, to require 
financial institutions to file reports that are determined to have a 
high degree of usefulness in criminal, tax, and regulatory matters, or 
in the conduct of intelligence or counter-intelligence activities to 
protect against international terrorism, and to implement counter-money 
laundering programs and compliance procedures.\2\ Regulations 
implementing Title II of the BSA appear at 31 CFR Chapter X. The 
authority of the Secretary to administer the BSA has been delegated to 
the Director of FinCEN.
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    \2\ Language expanding the scope of the BSA to intelligence or 
counter-intelligence activities to protect against international 
terrorism was added by Section 358 of the Uniting and Strengthening 
America by Providing Appropriate Tools Required to Intercept and 
Obstruct Terrorism Act of 2001 (the USA PATRIOT Act), Public Law 
107-56.
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    The Secretary was granted authority with the enactment of Title 31 
U.S.C., to require financial institutions and other persons to file 
various BSA reports. The information collected on the reports is 
required to be provided pursuant to Title 31 U.S.C., as implemented by 
FinCEN regulations found throughout 31 CFR chapter X. The information 
collected pursuant to this authority is made available to appropriate 
agencies and organizations as disclosed in FinCEN's Privacy Act System 
of Records Notice.\3\
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    \3\ Treasury Department bureaus such as FinCEN renew their 
System of Records Notices every three years unless there is cause to 
amend them more frequently. FinCEN's System of Records Notice was 
most recently published at 73 FR 42405, 42407-9 (July 21, 2008).
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    Current Action: In support of Treasury's paperless initiative and 
efforts to make the government operations more efficient, FinCEN has 
chosen to mandate electronic filing of certain BSA reports effective 
June 30, 2012.
    This requirement will significantly enhance the quality of our 
electronic data, improve our analytic capabilities in supporting law 
enforcement requirements, and result in a significant reduction in real 
costs to the U.S. government and ultimately to U.S. taxpayers. 
Specifically, we propose to make mandatory the electronic submission of 
all BSA reports excluding the CMIR.\4\
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    \4\ See supra note 1.
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    Background: Since October 2002, FinCEN has provided financial 
institutions with the capability of electronically filing BSA reports 
through its system called BSA E-Filing. Effective August 2011, the 
system was expanded to support individuals filing the Report of Foreign 
Bank and Financial Accounts (FBAR) report. BSA E-Filing is a secure, 
Web-based electronic filing system. It is a flexible solution for 
financial institutions or individuals, whether they file one BSA report 
or thousands. BSA E-Filing is an accessible service that filers can 
access by using their existing internet connections regardless of 
connection speed. In addition, it is designed to minimize filing errors 
and provide enhanced feedback to filing institutions or individuals, 
thereby providing a significant improvement in data quality.
    BSA E-Filing, which is provided free of charge, features 
streamlined BSA information submission; faster routing of information 
to law enforcement; greater data security and privacy compared with 
paper forms; long-term

[[Page 57800]]

cost savings to institutions, individuals, and the government; and 
insures compatibility with future versions of BSA reports.
    In addition, BSA E-Filing offers the following features not 
available on paper:
     Electronic notification of submissions, receipt of 
submission, and errors, warnings, and alerts;
     Batch validation;
     Acknowledgement that a currency transaction report (CTR) 
and or suspicious activity report (SAR) was filed;
     Feedback reports to filers;
     Faster receipt for money services businesses of 
registration acknowledgement letter;
     Ability to send and receive secure messages;
     Use of Adobe forms that allows users to create templates, 
reducing data entry but still providing for printing paper copies if 
the filer wants to use a paper copy for its internal review and 
approval processes;
     Ability for supervisory users to assign system roles to 
their staff; and
     Availability of helpful training materials.
    In 2010, we initiated a complete redesign and rebuilding of a new 
system-of-record that significantly enhances FinCEN's current technical 
capabilities to receive, process, share, and store BSA data. A 
significant part of this upgrade was the implementation of state-of-
the-art electronic reporting or information collection tools. As of 
July 1, 2011, over 84% of BSA reports are filed electronically with 
FinCEN.\5\ FinCEN annually measures customer satisfaction with BSA E-
Filing and has a performance goal of at least 90% satisfaction; in 
Fiscal Year 2010, 96% of customers were satisfied with BSA E-Filing.\6\ 
To enroll with BSA E-Filing financial institutions or individuals go to 
http://bsaefiling.fincen.treas.gov/main.html and follow four easy 
steps.
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    \5\ As of July 2011, there are over 12,000 registered e-filers. 
Of the 1250 major filers, 659 are currently e-filing. FinCEN 
anticipates that many current paper filers will convert to e-file 
when the new BSA E-Filing system becomes available.
    \6\ See FinCEN's 2010 Annual Report, available at http://www.fincen.gov/news_room/rp/files/annual_report_fy2010.pdf.
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    As a result of the 2010 initiative, FinCEN is in the process of 
fielding a new BSA Collection, Processing, and Analytic system. The new 
system, which includes significant e-filing improvements, is designed 
to support the most efficient state-of-the-art electronic filing. The 
database will accept XML-based dynamic reports as well as certain other 
file formats. The various file formats \7\ will be provided to permit 
integration into in-house systems or for use by service providers.
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    \7\ The XML Schema, ACSII, and the electronic file 
specifications will be provided at no cost to filers.
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    All filings (batch, computer-to-computer, and discrete) will be 
initiated through the BSA E-Filing system \8\ using current 
registration and log-in procedures. Although batch and computer-to-
computer filing processes will remain unchanged, the file format will 
change to match the database. Batch and computer-to-computer filers 
will file reports, which are based on an electronic file specification 
that will be provided free of charge. Discrete filings (the replacement 
for submitting a single paper report) will be based on Adobe LiveCycle 
Designer ES dynamic forms. The discrete function is available for all 
small business report filers (as well as individuals). The discrete 
filing function will be accessed by logging into the BSA E-Filing 
System and entering a pre-approved user ID and password. During log-in 
to the discrete filing option, filers will be prompted through a series 
of questions.\9\
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    \8\ BSA E-Filing is a free Web-based service provided by FinCEN. 
More information on the filing methods may be accessed at http://bsaefiling.fincen.treas.gov/main.html.
    \9\ A series of predetermined questions designed to establish 
the type of institution and filing in much the same manner as used 
in widely accepted income tax filing software.
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    After log-in, a financial institution filing a report through the 
discrete function will answer another set of questions that will 
establish a subset of the data fields appropriate to the filer's 
specific type of filing institution.
    Today's proposal requiring filers to submit certain BSA reports 
electronically using the free FinCEN BSA E-Filing system will provide a 
range of benefits. Electronic filing will also facilitate the rapid 
dissemination of financial and suspicious activity information in 
connection with BSA filings, making information contained in these 
filings more readily available to--and more easily searchable by--law 
enforcement, the financial regulatory community, and other users of BSA 
data. Additionally, the proposal to require certain BSA reports to be 
filed electronically will result in a significant reduction in the use 
of paper, producing a positive environmental impact. Further, the 
implementation of the proposal has the potential to save the government 
a few million dollars per year through the reduction of expenditures 
associated with current paper processing, in particular the physical 
intake and sorting of incoming reports, and the electronic keying of 
reported information into the database.
    Security: Mandatory electronic filing will provide increased 
security not available with paper filings. At the present time, all 
paper reports are mailed to the IRS Enterprise Computing Center--
Detroit (ECC-D) as unclassified mail with no special handling via the 
U.S. Postal Service system. On occasion, mailed paper reports have been 
delayed, and in some cases damaged beyond readability. A financial 
institution may not discover that a report was not received by ECC-D 
until many months after the report was due.\10\ For example, problems 
with delivery of reports may not be discovered until the financial 
institution is examined by its regulator, and the regulator compares a 
list of the reports that are posted to the database against the 
institution's official files. The BSA E-Filing System is a secure 128-
bit single socket layer protected Web-based filing system. Reports 
received are acknowledged and any noted errors are reported back to the 
filer. This process provides the filer with a record that the required 
filing was received, as well as suggestions on how to improve the 
accuracy of their future reports. Reports originated by the filer are 
posted securely directly to the database, thereby significantly 
reducing or eliminating possibility of data compromise.
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    \10\ The missing report becomes more critical if it was 
reporting suspicious activity--especially when relating to terrorist 
financing.
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Filer Impact Assessment

    a. Depository institutions: Based on information available we 
believe this change in filing procedures will have minimal impact on 
depository institutions. All depository institutions are currently 
required to file quarterly call or thrift financial reports with their 
regulator electronically through a Web-based portal provided by the 
appropriate federal regulator. This same electronic connectivity may be 
used to file BSA reports with FinCEN by logging in to the BSA E-Filing 
System Web-based portal.
    b. Broker-Dealers, Future-Commission Merchants (FCMs), Introducing 
Brokers in Commodities (IB-Cs), and Mutual Funds: \11\ Based on 
information available we believe this change in filing procedures will 
have minimal impact on these filing institutions. This group is highly 
automated and enjoys robust electronic buying and selling systems with 
sophisticated processing

[[Page 57801]]

and reporting systems.\12\ Currently the Securities and Exchange 
Commission (SEC) mandates electronic filing,\13\ as does the Commodity 
Futures Trading Commission (CFTC).\14\
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    \11\ FinCEN is considering adding a SAR reporting requirement to 
Investment Adviser's (IA's) registered with the SEC. Mandatory e-
filing will have minimum impact on this group.
    \12\ Currently both the SEC and the CFTC require electronic 
reporting, The SEC through the EDGAR system and the CFTC through the 
NFC Windjammer and Easy File systems.
    \13\ See http://www.sec.gov/info/edgar/regoverview.htm.
    \14\ For financial institutions subject to CFTC oversight See 
NFA Electronic Filings at http://www.nfa.futures.org/NFA-electronic-filings/index.HTML.
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    c. Insurance companies: Based on information available we believe 
this change in filing procedures will have minimal impact on these 
institutions. This group is highly automated.\15\
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    \15\ See the National Insurance Producer Registry (NIPR) at 
http://www.nipr.com/. NIPR is a unique public-private partnership 
that supports the work of the states and the National Association of 
Insurance Commissioners (NAIC) in making the producer-licensing 
process more cost-effective, streamlined and uniform for the benefit 
of regulators, the insurance industry and the consumers they protect 
and serve.
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    d. Casinos and Card Clubs: \16\ Based on information available we 
believe this change in filing procedures will have minimal impact on 
these institutions.
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    \16\ Casinos and Card Clubs with gross annual gaming revenues in 
excess of $1 million (see 31 CFR1010.100 (t)(5)(ii) and (6)(ii)).
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    e. Money Services Businesses (MSBs): Information gained from a 
review of the MSB filings of the currency transaction report (CTR), 
SAR, and Registration of Money Services Business (RMSB) forms indicates 
that some impact to this group can be expected. Information in trade 
journals and other publications, along with informal comments from the 
Internal Revenue Service Small Business/Self Employed, indicate that 
most filers have Internet connectivity. MSBs routinely accept and 
process credit card transactions requiring automated communications 
with the approving card center. They also routinely place orders for 
goods and services through the Internet and electronically access bill 
paying services. Additionally, basic Internet access can be obtained 
through a simple inexpensive dial-up connection or at professional 
external Internet facilities such as service providers for those MSBs 
without Internet connectivity. Lastly, FinCEN has included provisions 
for requesting a hardship exception in this notice in case unforeseen 
situations arise.\17\
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    \17\ See Filer impact paragraph ``g.''
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    f. Service Providers: There is a network of third-party service 
providers with which financial institutions may contract to provide 
electronic filing services to the BSA E-Filing System. FinCEN believes 
this group to be highly automated and many are already using the BSA E-
Filing System. We do not anticipate that this proposal will have an 
impact on this group.
    g. Small businesses: \18\ In support of small businesses, FinCEN's 
Office of Compliance will provide a temporary hardship exemption 
capability. A small business may request, and may be granted, an 
emergency extension of up to one year if it can document a sufficiently 
serious problem that prevents compliance with the new filing 
requirements. The approved extension will be effective for one year 
from the effective date of this notice.\19\ A hardship request based 
solely on a lack of Internet connectivity or a business decision to 
restrict Internet connectivity will not be considered adequate 
justification for an extension.
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    \18\ See the Small Business Administration's (SBA) Web site 
http://www.sba.gov/content/what-sbas-definition-small-business-concern for SBA's definition of a small business concern.
    \19\ Request for emergency extension will be mailed to: 
Department of the Treasury, Financial Crimes Enforcement Network, 
Attention RPP-CP, PO Box 39, Vienna, VA 22183 or may be e-mailed to: 
[email protected].
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    h. Individual filers: Effective August 2011, FinCEN expanded its 
support of electronic filing to individuals.\20\ The capability to file 
the Report of Foreign Bank and Financial Accounts (FBAR Form TD F 90-
22.1) became available and individuals worldwide can sign up to file 
their individual FBAR's by accessing the FinCEN E-Filing Web site. 
Based on new applications to date, there is no indication of any issues 
with individuals using this new capability.
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    \20\ See page 3 Background.
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Paperwork Reduction Act (PRA)

    Type of Review: Review of a new proposal to mandate the electronic 
filing of BSA reports.
    Affected Public: Businesses or other for-profit and non-profit 
institutions.
    Frequency: As required.
    Estimated Burden: Effective with the FinCEN IT Modernization, BSA 
reporting will be supported by seven BSA reports.\21\ The burden for 
electronic filing and recordkeeping of each BSA report is reflected in 
the OMB approved burden \22\ for each of these reports. The non-
reporting recordkeeping burden is reflected separately.\23\
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    \21\ BSA-SAR, BSA-CTR, Designation Of Exempt Person, CMIR, RMSB, 
Foreign Bank Account Report, and the Report of Cash Over $10,000 
Received in a Trade or Business (Form 8300).
    \22\ See OMB Control Numbers 1506-0065, 1506-0064, 1506-0009, 
1506-0013, 1506-0014, 1506-0018.
    \23\ See OMB Control Numbers 1506-0051 through 1506-0059.
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    Estimated number of respondents for all reports = 74,900.\24\
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    \24\ All filers subject to BSA reporting requirements excluding 
CMIR. See supra note 1.
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    Estimated Total Annual Responses for all reports = 16,172,770.
    Estimated Total Annual Burden Hours = 20,874,761.\25\
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    \25\ Includes all reporting and recordkeeping burden associated 
with filing BSA reports.
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    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless the collection of 
information displays a valid OMB control number. Records required to be 
retained pursuant to the BSA must be retained for five years.

Request for Comments

    Comments submitted in response to this notice will be summarized 
and/or included in the request for OMB approval. All comments will 
become a matter of public record. Comments are invited on: (a) Whether 
the collection of information only by electronic means is necessary for 
the proper performance of the functions of the agency, including 
whether the information shall have practical utility; (b) the accuracy 
of the agency's estimate of the burden of the collection of 
information; (c) ways to enhance the quality, utility, and clarity of 
the information to be collected; (d) ways to minimize the burden of the 
collection of information on respondents (filers), including through 
the use of automated collection techniques or other forms of 
information technology; (e) the practicality of utilizing external 
Internet facilities or service providers to occasionally file BSA 
reports, (f) estimates of capital or start-up costs and costs of 
operation, maintenance, or purchase of services to provide information 
by filers that currently do not have Internet access, and (g) the 
enhanced security of sensitive information and significant cost savings 
of electronic filing.

    Dated: September 13, 2011.
James H. Freis, Jr.,
Director, Financial Crimes Enforcement Network.
[FR Doc. 2011-23841 Filed 9-15-11; 8:45 am]
BILLING CODE 4810-02-P