[Federal Register Volume 81, Number 126 (Thursday, June 30, 2016)]
[Rules and Regulations]
[Pages 42503-42506]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-15653]


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DEPARTMENT OF THE TREASURY

Financial Crimes Enforcement Network

31 CFR Part 1010

RIN 1506-AB33


Civil Monetary Penalty Adjustment and Table

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

ACTION: Interim final rule.

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SUMMARY: FinCEN is amending the regulations under the Bank Secrecy Act 
to adjust the maximum amount or range, as set by statute, of certain 
civil monetary penalties within its jurisdiction to account for 
inflation. This action is being taken to implement the requirements of 
the Federal Civil Penalties Inflation Adjustment Act of 1990, as 
further amended by the Federal Civil Penalties Inflation Adjustment Act 
Improvements Act of 2015.

DATES: Effective Date: August 1, 2016.
    Comment date: Written comments on this Interim Final Rulemaking 
must be submitted on or before August 1, 2016.

ADDRESSES: Comments may be submitted, identified by Regulatory

[[Page 42504]]

Identification Number (RIN) 1506-AB33, by any of the following methods:
     Federal E-rulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments. Include RIN 1506-AB33 
in the submission. Refer to Docket Number FINCEN-2014-0005.
     Mail: FinCEN, P.O. Box 39, Vienna, VA 22183. Include RIN 
1506-AB33 in the body of the text.

Please submit comments by one method only. Comments submitted in 
response to this interim final rulemaking will become a matter of 
public record. Therefore, you should submit only information that you 
wish to make publicly available.
    Inspection of comments: The public dockets for FinCEN can be found 
at Regulations.gov. Federal Register notices published by FinCEN are 
searchable by docket number, RIN, or document title, among other 
things, and the docket number, RIN, and title may be found at the 
beginning of the notice. FinCEN uses the electronic, Internet-
accessible dockets at Regulations.gov as their complete, official-
record docket; all hard copies of materials that should be in the 
docket, including public comments, are electronically scanned and 
placed in the docket. In general, FinCEN will make all comments 
publicly available by posting them on http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: The FinCEN Resource Center at (800) 
767-2825 or email frc@fincen.gov.

SUPPLEMENTARY INFORMATION: 

I. Background

    The Federal Civil Penalties Inflation Adjustment Act of 1990, 28 
U.S.C. 2461 note, (``FCPIA Act''), as further amended by the Federal 
Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (the 
``2015 Act''), requires each Federal agency to adjust its civil 
monetary penalties within its jurisdiction for inflation annually. 
Specifically, the FCPIA Act now requires agencies to adjust the level 
of civil monetary penalties with an initial ``catch-up'' adjustment 
through an interim final rulemaking, and to make subsequent annual 
adjustments for inflation. The adjustment is based on the formula 
described in section 5(b) of the FCPIA Act. Increases are rounded to 
the nearest multiple of $1.
    To calculate the catch-up adjustment, agencies must identify, for 
each penalty subject to the FCPIA Act, the year and corresponding 
amount(s) for which the maximum penalty or range of minimum and maximum 
penalties was established or last adjusted, whichever is later. 
Agencies will adjust the penalty amount or range of penalty amounts 
based on the Consumer Price Index for all Urban Consumers (``CPI-U'') 
for the month of October 2015 using an inflation factor, or multiplier, 
that reflects the CPI-U increase for the year in which the maximum 
penalty or range of penalties was established or last adjusted.\1\ For 
the first penalty adjustment after the effective date of the 2015 Act, 
the amount of the increase shall not exceed 150 percent of the amount 
of a civil monetary penalty on November 2, 2015, the date of the 
enactment of the 2015 Act.
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    \1\ OMB Memorandum M-16-06, Implementation of the Federal Civil 
Penalties Inflation Adjustment Act Improvements Act of 2015, 
February 24, 2014 sets forth inflation factors. See, https://www.whitehouse.gov/sites/default/files/omb/memoranda/2016/m-16-06.pdf.
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    Subsequent annual inflation adjustments will be based on any 
percentage change between the October CPI-U preceding the date of the 
adjustment, and the prior year's October CPI-U.
    FinCEN is authorized to impose civil monetary penalties for 
violations of the Bank Secrecy Act and its implementing regulations. 
Several of those penalties, such as the penalty under 31 U.S.C. 
5321(a)(2), are not subject to adjustment under the FCPIA Act because 
they lack a stated dollar amount and are instead written solely as 
functions of violations. The penalties subject to adjustment under the 
FCPIA Act are as follows:
     12 U.S.C. 1829b(j), relating to recordkeeping violations 
for funds transfers. The $10,000 penalty amount set out in 12 U.S.C. 
1929b(j) was last adjusted by statute in 1988. The inflation factor for 
1988 is 1.97869. Multiplying the penalty amount of $10,000 by the 
inflation factor of 1.97869 results in an inflation adjusted maximum 
penalty amount of $19,787, when rounded to the nearest dollar.
     12 U.S.C. 1955, relating to willful or grossly negligent 
recordkeeping violations. The $10,000 penalty amount set out in 12 
U.S.C. 1955 was last adjusted by statute in 1988. The inflation factor 
for 1988 is 1.97869. Multiplying the penalty amount of $10,000 by the 
inflation factor of 1.97869 results in an inflation adjusted maximum 
penalty amount of $19,787, when rounded to the nearest dollar.
     31 U.S.C. 5318(k)(3)(C), relating to failures to terminate 
correspondent relationships with a foreign bank. The $10,000 penalty 
amount set out in 31 U.S.C. 5318(k)(3)(C) was last adjusted by statute 
in 2001. The inflation factor for 2001 is 1.33842. Multiplying the 
current maximum penalty amount of $10,000 by the inflation factor of 
1.33842 results in an inflation-adjusted maximum penalty amount of 
$13,384, when rounded to the nearest dollar.
     31 U.S.C. 5321(a)(1), relating to willful violations of 
Bank Secrecy Act requirements. The minimum and maximum amounts of 
$25,000 and $100,000 set out in 31 U.S.C. 5321(a)(1) were last adjusted 
by statute in 1986. The inflation factor for 1986 is 2.15628. 
Multiplying the current minimum and maximum penalty amounts of $25,000 
and $100,000 by the inflation factor of 2.15628 results in an 
inflation-adjusted range of minimum and maximum penalty amounts of 
$53,907 and $215,628, respectively, when rounded to the nearest dollar.
     31 U.S.C. 5321(a)(5)(B)(i), relating to non-willful 
violations of foreign financial agency transactions. The $10,000 amount 
set out in 31 U.S.C. 5312(a)(5)(B)(i) was last adjusted by statute in 
2004. The inflation factor for 2004 is 1.24588. Multiplying the current 
maximum penalty amount of $10,000 by the inflation factor of 1.24588 
results in an inflation-adjusted maximum penalty of $12,459, when 
rounded to the nearest dollar.
     31 U.S.C. 5321(a)(5)(C), relating to willful violations of 
foreign financial agency transactions. The $100,000 amount set out in 
31 U.S.C. 5321(a)(5)(C) was last adjusted by statute in 2004. The 
inflation factor for 2004 is 1.24588. Multiplying the current maximum 
penalty amount of $100,000 by the inflation factor of 1.24588 results 
in an inflation-adjusted maximum penalty amount of $124,588, when 
rounded to the nearest dollar.
     31 U.S.C. 5321(a)(6)(A), relating to negligent violations 
by a financial institution or non-financial trade or business. The $500 
amount set out in 31 U.S.C. 5321(a)(6)(A) was last adjusted by statute 
in 1986. The inflation factor for 1986 is 2.15628. Multiplying the 
current maximum penalty amount of $500 by the inflation factor of 
2.15628 results in an inflation-adjusted maximum penalty amount of 
$1,078, when rounded to the nearest dollar.
     31 U.S.C. 5321(a)(6)(B), relating to a pattern of 
negligent activity by a financial institution or non-financial trade or 
business. The $50,000 penalty amount set out in 31 U.S.C. 5321(a)(6)(B) 
was last adjusted by statute in 1992. The inflation factor for 1992 is 
1.67728. Multiplying the current maximum penalty amount of $50,000 by 
the inflation factor of 1.67728 results in an inflation-adjusted 
maximum penalty amount of $83,864, when rounded to the nearest dollar.

[[Page 42505]]

     31 U.S.C. 5321(a)(7), relating to violations of due 
diligence requirements for private banking accounts or correspondent 
bank accounts involving foreign persons, the prohibition on 
correspondent accounts for shell banks, and any special measure. The 
$1,000,000 amount set out in 31 U.S.C. 5321(a)(7) was last adjusted by 
statute in 2001. The inflation factor for 2001 is 1.33842. Multiplying 
the current maximum penalty amount of $1,000,000 by the inflation 
factor of 1.33842 results in an inflation-adjusted maximum penalty 
amount of $1,338,420, when rounded to the nearest dollar.
     31 U.S.C. 5330(e), relating to the failure to register as 
a money transmitting business. The $5,000 penalty amount set out in 31 
U.S.C. 5330(e) was last adjusted by statute in 1994. The inflation 
factor for 1994 is 1.59089. Multiplying the current penalty amount of 
$5,000 by the inflation factor of 1.59089 results in an inflation-
adjusted penalty amount of $7,954, when rounded to the nearest dollar.
    The adjusted civil penalty amounts described in this rule are 
applicable only to civil penalties assessed after August 1, 2016, whose 
associated violations occurred after November 2, 2015, the date of 
enactment of the 2015 Amendments. Therefore, violations occurring on or 
before November 2, 2015, and assessments made prior to August 1, 2016 
whose associated violations occurred after November 2, 2015, will 
continue to be subject to the civil monetary penalty amounts set forth 
in FinCEN's existing regulations.

II. Request for Comment

    FinCEN invites comment on any and all aspects of the interim final 
rule.

III. Effective Date

    The FCPIA Act mandates that inflation adjustments to civil monetary 
penalties be published through an interim final rulemaking to be 
published by July 1, 2016, and that the inflation-adjusted civil 
monetary penalties take effect not later than August 1, 2016.

IV. Regulatory Flexibility Act

    The Regulatory Flexibility Act applies only to rules for which an 
agency publishes a general notice of proposed rulemaking pursuant to 5 
U.S.C. 553(b). See 5 U.S.C. 601(2). Because the FCPIA Act mandates that 
this rulemaking be an interim final rule, FinCEN is not publishing a 
general notice of proposed rulemaking. Thus, the Regulatory Flexibility 
Act does not apply to this interim final rule.

V. Unfunded Mandates Act

    Section 202 of the Unfunded Mandates Reform Act of 1995, Public Law 
104-4 (``Unfunded Mandates Act'') requires that an agency prepare a 
budgetary impact statement before promulgating a rule that includes a 
Federal mandate that may result in expenditure by state, local, and 
tribal governments, in the aggregate, or by the private sector, of $100 
million or more in any one year. If a budgetary impact statement is 
required, section 205 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 
this interim final rule will not result in expenditures by state, 
local, and tribal governments, or by the private sector, of $100 
million or more. Accordingly, FinCEN has not prepared a budgetary 
impact statement or specifically addressed the regulatory alternatives 
considered.

VI. Executive Orders 13563 and 12866

    Executive Orders 13563 and 12866 direct agencies to assess costs 
and benefits of available regulatory alternatives and, if regulation is 
necessary, to select regulatory approaches that maximize net benefits 
(including potential economic, environmental, public health and safety 
effects, distributive impacts, and equity). Executive Order 13563 
emphasizes the importance of quantifying both costs and benefits, of 
reducing costs, of harmonizing rules, and of promoting flexibility. It 
has been determined that this is not a significant regulatory action 
for purposes of Executive Order 12866. Accordingly, a regulatory impact 
analysis is not required.

VII. Paperwork Reduction Act

    The Paperwork Reduction Act does not apply because the interim 
final rule does not impose information collection requirements that 
would require the approval of the Office of Management and Budget under 
44 U.S.C. 3501 et seq.

List of Subjects in 31 CFR Part 1010

    Authority delegations (Government agencies), Banks and banking, 
Currency, Investigations, Law enforcement, Reporting and recordkeeping 
requirements.

Authority and Issuance

    For the reasons set forth in the preamble, Part 1010 of Chapter X 
of title 31 of the Code of Federal Regulations is amended as follows:

PART 1010--GENERAL PROVISIONS

0
1. The authority citation for part 1010 is revised to read as follows:

    Authority: 12 U.S.C. 1829b and 1951-1959; 31 U.S.C. 5311-5314 
and 5316-5332; title III, sec. 314, Pub. L. 107-56, 115 Stat. 307; 
sec. 701. Pub. L. 114-74, 129 Stat. 599.


0
2. Amend Sec.  1010.820 by adding paragraph (i) to read as follows:


Sec.  1010.820  Civil penalty.

* * * * *
    (i) For penalties that are assessed after August 1, 2016, see Sec.  
1010.821 for rules relating to the maximum amount of the penalty.

0
3. Add Sec.  1010.821 to read as follows:


Sec.  1010.821  Penalty adjustment and table.

    (a) Inflation adjustments. In accordance with the Federal Civil 
Penalties Inflation Adjustment Act of 1990, 28 U.S.C. 2461 note, 
(``FCPIA Act''), as further amended by the Federal Civil Penalties 
Inflation Adjustment Act Improvements Act of 2015, FinCEN has set forth 
in paragraph (b) of this section adjusted maximum penalty amounts for 
each civil monetary penalty provided by law within its jurisdiction 
that is subject to the FCPIA Act. The adjusted civil monetary penalty 
amounts replace the amounts published in the statutes authorizing the 
assessment of penalties.
    (b) Maximum civil monetary penalties. The statutory penalty 
provisions and their adjusted maximum amounts or range of minimum and 
maximum amounts are set out in Table 1. The last column in the table 
provides the newly effective maximum penalty amounts or range of 
minimum and maximum amounts. These maximum penalty amounts do not, 
however, limit the total amount of a penalty in the case of a penalty 
that may be imposed for each day a violation continues.

[[Page 42506]]



                            Table 1 of Sec.   1010.821--Penalty Adjustment and Table
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                                                                                                  New maximum
                                                                                                penalty amounts
                                                                                                  or range of
                                                                                Statutory         minimum and
           U.S. Code citation                  Civil monetary penalty       penalties as last   maximum penalty
                                                     description                amended by        amounts for
                                                                               statute ($)         penalties
                                                                                               assessed after 8/
                                                                                                   1/2016 ($)
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12 U.S.C. 1829b(j)                        Relating to Recordkeeping                    10,000             19,787
                                           Violations For Funds Transfers.
12 U.S.C. 1955                            Willful or Grossly Negligent                 10,000             19,787
                                           Recordkeeping Violations.
31 U.S.C. 5318(k)(3)(C)                   Failure to Terminate                         10,000             13,384
                                           Correspondent Relationship with
                                           Foreign Bank.
31 U.S.C. 5321(a)(1)                      General Civil Penalty Provision     25,000-$100,000    53,907-$215,628
                                           for Willful Violations of Bank
                                           Secrecy Act Requirements.
31 U.S.C. 5321(a)(5)(B)(i).               Foreign Financial Agency                     10,000             12,459
                                           Transaction--Non-Willful
                                           Violation of Transaction.
31 U.S.C. 5321(a)(5)(C)                   Foreign Financial Agency                    100,000            124,588
                                           Transaction--Willful Violation
                                           of Transaction.
31 U.S.C. 5321(a)(6)(A)                   Negligent Violation by Financial                500              1,078
                                           Institution or Non-Financial
                                           Trade or Business.
31 U.S.C. 5321(a)(6)(B)                   Pattern of Negligent Activity by             50,000             83,864
                                           Financial Institution or Non-
                                           Financial Trade or Business.
31 U.S.C. 5321(a)(7)                      Violation of Certain Due                  1,000,000          1,338,420
                                           Diligence Requirements,
                                           Prohibition on Correspondent
                                           Accounts for Shell Banks, and
                                           Special Measures.
31 U.S.C. 5330(e)                         Civil Penalty for Failure to                  5,000              7,954
                                           Register as Money Transmitting
                                           Business.
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    Dated: June 28, 2016.
 Jamal El-Hindi,
Acting Director, Financial Crimes Enforcement Network.
[FR Doc. 2016-15653 Filed 6-29-16; 8:45 am]
 BILLING CODE 4810-02-P