[Federal Register Volume 89, Number 38 (Monday, February 26, 2024)]
[Notices]
[Pages 14148-14149]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-03965]


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DEPARTMENT OF THE TREASURY

Financial Crimes Enforcement Network


Agency Information Collection Activities; Proposed Renewal; 
Comment Request; Renewal Without Change of the Beneficial Ownership 
Requirements for Legal Entity Customers

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

ACTION: Notice and request for comments.

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SUMMARY: As part of its continuing effort to reduce paperwork and 
respondent burden, FinCEN invites comment on a renewal, without change, 
of existing information collection requirements related to beneficial 
ownership requirements for legal entity customers. Under Bank Secrecy 
Act regulations, covered financial institutions are required to 
collect, and to maintain records of, the information used to identify 
and verify the identity of each beneficial owner of their legal entity 
customers, subject to certain exclusions and exemptions. This request 
for comment is made pursuant to the Paperwork Reduction Act of 1995 
(PRA).

DATES: Written comments are welcome and must be received on or before 
April 26, 2024.

ADDRESSES: Comments may be submitted by any of the following methods:
     Federal E-rulemaking Portal: https://www.regulations.gov. 
Follow the instructions for submitting comments. Refer to Docket Number 
FINCEN-2024-0008 and the specific Office of Management and Budget (OMB) 
control number 1506-0070.
     Mail: Policy Division, Financial Crimes Enforcement 
Network, P.O. Box 39, Vienna, VA 22183. Refer to Docket Number FINCEN-
2024-0008 and OMB control number 1506-0070.
    Please submit comments by one method only. Comments will be 
reviewed consistent with the PRA and applicable OMB regulations and 
guidance. All comments submitted in response to this notice will become 
a matter of public record. Therefore, you should submit only 
information that you wish to make publicly available.

FOR FURTHER INFORMATION CONTACT: FinCEN's Regulatory Support Section at 
1-800-767-2825 or electronically at [email protected].

SUPPLEMENTARY INFORMATION:

I. Statutory and Regulatory Provisions

    The legislative framework generally referred to as the Bank Secrecy 
Act (BSA) consists of the Currency and Foreign Transactions Reporting 
Act of 1970, as amended by the Uniting and Strengthening America by 
Providing Appropriate Tools Required to Intercept and Obstruct 
Terrorism Act of 2001 (USA PATRIOT Act) \1\ and other legislation, 
including the Anti-Money Laundering Act of 2020 (AML Act).\2\ The BSA 
is codified at 12 U.S.C. 1829b and 1951-1960 and 31 U.S.C. 5311-5314 
and 5316-5336, and notes thereto, with implementing regulations at 31 
CFR Chapter X.
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    \1\ USA PATRIOT Act, Public Law 107-56.
    \2\ The AML Act was enacted as Division F, sections 6001-6511, 
of the William M. (Mac) Thornberry National Defense Authorization 
Act for Fiscal Year 2021, Public Law 116-283, 134 Stat. 3388 (NDAA).
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    The BSA authorizes the Secretary of the Treasury (Secretary) to, 
inter alia, require financial institutions to keep records and file 
reports that are determined to have a high degree of usefulness in 
criminal, tax, or regulatory matters, risk assessments or proceedings, 
or in the conduct of intelligence or counter-intelligence activities to 
protect against terrorism, and to implement anti-money laundering (AML) 
programs and compliance procedures.\3\ The authority of the Secretary 
to administer the BSA has been delegated to the Director of FinCEN.\4\
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    \3\ Section 358 of the USA PATRIOT Act expanded the purpose of 
the BSA by including a reference to reports and records ``that have 
a high degree of usefulness in intelligence or counterintelligence 
activities to protect against international terrorism.'' See 12 
U.S.C. 1829b(a). Section 6101 of the AML Act further expanded the 
purpose of the BSA to cover such matters as preventing money 
laundering, tracking illicit funds, assessing risk, and establishing 
appropriate frameworks for information sharing. See 31 U.S.C. 5311.
    \4\ Treasury Order 180-01 (Jan. 14, 2020).
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    Subject to certain exclusions and exemptions, 31 CFR 1010.230 
requires covered financial institutions \5\ to establish and maintain 
written procedures that are reasonably designed to identify and verify 
beneficial owners of new accounts opened by legal entity customers and 
to include such procedures in their AML programs. Covered financial 
institutions may obtain the required identifying information by either 
obtaining a prescribed certification form from the individual opening 
the account on behalf of the legal entity customer, or by obtaining 
from the individual the information required by the form by another 
means, provided the individual certifies to the best of the 
individual's knowledge the accuracy of the information. Covered 
financial institutions must verify the identity of each beneficial 
owner identified according to risk-based procedures and may rely on the 
information supplied by the legal entity customer regarding the 
identity of its beneficial owner or owners, provided that it has no 
knowledge of facts that would reasonably call into question the 
reliability of such information.
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    \5\ Covered financial institutions include certain banks, 
brokers or dealers in securities, mutual funds, futures commission 
merchants, and introducing brokers in commodities. See 31 CFR 
1010.230(f), 1010.605(e)(1).
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    Covered financial institutions must also maintain a record of the 
identifying information obtained, and a description of any document 
relied on for verification, including a description of any non-
documentary methods and results of any measures undertaken, and the 
resolutions of substantive discrepancies. Covered financial 
institutions must retain records used to identify each beneficial owner 
for five years after the date the account is closed and must also 
retain records used to verify the identity of each beneficial owner for 
five years after the record is made.
    As required by section 6403(d) of the Corporate Transparency Act 
(CTA), which was enacted as part of the AML Act, FinCEN intends to 
revise the requirements of 31 CFR 1010.230 to bring them into 
conformance with the

[[Page 14149]]

CTA and address other considerations that FinCEN is required to take 
into account.\6\ As part of the revisions to 31 CFR 1010.230, FinCEN 
intends to further assess the PRA burden of these requirements.
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    \6\ The CTA is Title LXIV of the NDAA.
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II. Paperwork Reduction Act of 1995 7
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    \7\ Paperwork Reduction Act of 1995, Public Law 104-13, 44 
U.S.C. 3506(c)(2)(A).
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    Title: Beneficial Ownership Requirements for Legal Entity Customers 
(31 CFR 1010.230).
    OMB Control Number: 1506-0070.
    Form Number: Appendix A to Sec.  1010.230--Certification Regarding 
Beneficial Owners of Legal Entity Customers.
    Abstract: FinCEN is issuing this notice to renew the OMB control 
number for the beneficial ownership requirements for legal entity 
customers regulations contained in 31 CFR 1010.230.
    Affected Public: Business and other for-profit institutions and 
non-profit institutions.
    Type of Review: Renewal without change of a currently approved 
information collection.
    Frequency: As required.
    Estimated Number of Respondents: 15,221 covered financial 
institutions.\8\
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    \8\ FinCEN's estimate accounts for all covered U.S. financial 
institutions. There are approximately 15,221 covered financial 
institutions.

          Respondent Covered Financial Institutions by Category
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                                                               Number of
                 Financial institution type                    entities
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Banks.......................................................   \9\ 9,250
Brokers or dealers in securities............................  \10\ 3,477
Mutual funds................................................  \11\ 1,495
Futures commission merchants................................     \12\ 62
Introducing brokers in commodities..........................    \13\ 937
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    Total...................................................      15,221
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    Estimated Recordkeeping Burden per Response:
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    \9\ Bank data is as of December 14, 2023, from Federal Deposit 
Insurance Corporation (FDIC) BankFind. See FDIC, BankFind, available 
at https://banks.data.fdic.gov/bankfind-suite/bankfind. Credit union 
data is as of September 30, 2023, from the National Credit Union 
Administration (NCUA) Quarterly Data Summary Reports. See NCUA, 
Quarterly Data Summary Reports, available at https://ncua.gov/analysis/credit-union-corporate-call-report-data/quarterly-data-summary-reports.
    \10\ According to the Securities and Exchange Commission (SEC), 
there are 3,477 broker-dealers in securities as of December 2023. 
See SEC, Data, Company Information About Active Broker-Dealers, 
available at https://www.sec.gov/help/foiadocsbdfoia.
    \11\ According to the SEC, as of the third quarter of 2023, 
there are 1,495 open-end registered investment companies that report 
on Form N-CEN. SEC, Data, Form N-CEN Data Sets, available at https://www.sec.gov/dera/data/form-ncen-data-sets.
    \12\ According to the Commodity Futures Trading Commission 
(CFTC), there are 62 futures commission merchants as of October 31, 
2023. See CFTC, Financial Data for FCMs, available at https://www.cftc.gov/MarketReports/financialfcmdata/index.htm.
    \13\ According to National Futures Association, there are 937 
introducing brokers in commodities as of November 30, 2023.
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    a. Update and maintain beneficial ownership identification 
procedures: 20 minutes.\14\
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    \14\ See FinCEN, Customer Due Diligence Requirements for 
Financial Institutions Final Rule, 81 FR 29398 (May 11, 2016). The 
final rule recognized a burden of 56 hours to develop the initial 
procedures (40 hours for small entities). Once procedures are 
developed, an annual burden of 20 minutes is recognized for 
revisions to and maintenance of such procedures. Covered financial 
institutions were required to comply with this rule by May 11, 2018, 
so no burden hours are included in this analysis for the initial 
development of procedure.
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    b. Customer identification, verification, and review and 
recordkeeping of the beneficial ownership information: 80 minutes. A 
range of 40 to 120 minutes per legal entity customer (an average of 80 
minutes per legal entity customer).\15\
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    \15\ See FinCEN, Agency Information Collection Activities; 
Proposed Renewal; Comment Request; Renewal Without Change of the 
Beneficial Ownership Requirements for Legal Entity Customers, 84 FR 
72137 (Dec. 30, 2019). On December 30, 2019, FinCEN published a 
notice to renew the Beneficial Ownership Requirements for Legal 
Entity Customers (the 2019 Notice). In response to the 2019 Notice, 
a public policy, research and advocacy group, whose membership 
includes a broad range of U.S. and U.S.-based banks, provided a 
comment noting that the estimate for customer identification, 
verification, and review and recordkeeping of beneficial ownership 
information should be increased to a range of 40 to 120 minutes. 
Because of its broad membership of banks impacted by the 
regulations, FinCEN chose to take the average of the range of 40 to 
120 minutes to estimate a new burden of 80 minutes per new account 
opened by a legal entity customer. When the OMB control number was 
renewed in 2020, that 80 minutes estimate was incorporated. For the 
rationale for the increase in the burden estimate to 80 minutes per 
new account opened by a legal entity customer, see Office of 
Management and Budget, Supporting Statement for OMB Control Number 
1506-0070, available at https://www.reginfo.gov/public/do/PRAViewDocument?ref_nbr=202003-1506-001.
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    Estimated Total Annual Responses: 5,723,096.\16\
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    \16\ See FinCEN, Customer Due Diligence Requirements for 
Financial Institutions Final Rule, 81 FR 29398 (May 11, 2016). Based 
on research conducted as part of the final rule, it was estimated 
that each covered financial institution will open, on average, 1.5 
new legal entity accounts per business day. There are 250 business 
days per year. (15,221 covered financial institutions x 1.5 accounts 
per day x 250 business days per year = 5,707,875 legal entity 
accounts opened per year). 5,723,096 responses (5,707,875 accounts 
to verify plus 15,221 covered financial institution's programs to 
update).
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    Estimated Total Annual Recordkeeping Burden: 7,615,574 hours.\17\
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    \17\ 5,707,875 new legal entity accounts multiplied by 80 
minutes per account established and divided by 60 minutes per hour 
equals 7,610,500 burden hours to identify and verify beneficial 
owners of new legal entity accounts per year. 20 minutes to update 
and maintain beneficial ownership identification and verification 
procedures within a covered financial institution's AML program 
multiplied by 15,221 covered financial institutions and divided by 
60 minutes equals 5,074 burden hours annually. The total annual 
burden hours estimate for this information collection is (7,610,500 
+ 5,074) 7,615,574 hours.
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    Estimated Total Annual Reporting and Recordkeeping Cost: 
$372,782,347.30 (7,615,574 hours multiplied by $48.95).\18\
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    \18\ The average hourly wage rate is calculated from the May 
2022 U.S. Bureau of Labor Statistics (BLS) median hourly wage for 
``13-1041 Compliance Officer'' of $34.47. See BLS, Occupational 
Employment and Wages Statistics (May 2022), available at https://www.bls.gov/oes/tables.htm. The ratio between benefits and wages for 
private industry workers is $12.19 (hourly benefits)/$29.34 (hourly 
wages) = 0.42, as of September 2023. The benefit factor is 1 plus 
the benefit/wages ratio, or 1.42. See BLS, Employee Costs for 
Employee Compensation (Sept. 2023), available at https://
www.bls.gov/ecec/
home.htm#:~:text=Employer%20costs%20for%20private%20industry,percent%
20of%20total%20compensation%20costs. The fully-loaded wage rate is 
$48.95 ($34.47 multiplied by 1.42).
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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 it displays a valid 
OMB control number. Records required to be retained under 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 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, including through the use of automated 
collection techniques or other forms of information technology; and (e) 
estimates of capital or start-up costs and costs of operation, 
maintenance, and purchase of services to provide information.

Jimmy L. Kirby, Jr.,
Deputy Director, Financial Crimes Enforcement Network.
[FR Doc. 2024-03965 Filed 2-23-24; 8:45 am]
BILLING CODE 4810-02-P