[The Regulatory Plan and Unified Agenda of Federal Regulations]
[Department of the Treasury Regulatory Plan]
[From the U.S. Government Printing Office, www.gpo.gov]


DEPARTMENT OF THE TREASURY (TREAS)
Regulatory Plan for Fiscal Year 1995
Background
The Department of the Treasury is composed of, in addition to 
Departmental Offices, a number of offices and bureaus which have 
responsibility for a wide range of regulations. The primary missions of 
the Department include:

 Protecting and collecting the revenue under the Internal 
            Revenue Code and customs laws;
 Supervising national banks and thrift institutions;
 Managing the fiscal operations of the Federal Government;
 Enforcing laws relating to counterfeiting, Federal Government 
            securities, firearms and explosives, foreign commerce in 
            goods and financial instruments, and smuggling and 
            trafficking in contraband;
 Protecting the President, Vice President, and certain foreign 
            diplomatic personnel;
 Training Federal, State, and local law enforcement officers; 
            and
 Producing coins and currency.
While implementing its wide-ranging regulatory responsibilities, 
Treasury has aggressively pursued opportunities to reduce regulatory 
burdens, to reach out to the public for input when it promulgates 
regulations, and to provide clear, concise guidance for the many 
complicated statutes the Department administers. For example, shortly 
after the Administration took office, Treasury consulted with other 
banking regulators, the banking industry, the business community, and 
consumer groups to assemble a regulatory relief package to address the 
credit crunch. And the Department's efforts did not stop there: The 
Department's Office of the Comptroller of the Currency began a project 
to review, simplify, and reduce the number of regulations it 
administers regarding national banks.
Themes and Priorities for Fiscal Year 1995
To fulfill the regulatory principles announced by the President in 
Executive Order (E.O.) 12866, the Treasury Department has the following 
themes and priorities for fiscal year 1995:

 We will continue to improve the efficiency of collection 
            operations under the tax code through additional automation 
            of taxpayer filing, and we will seek to improve taxpayer 
            compliance with complex tax statutes by providing 
            additional guidance in a number of areas.
 In banking and finance, we will continue to reduce the 
            regulatory burden, where possible, by deleting regulatory 
            requirements, and we will continue to coordinate with other 
            banking regulators to ensure that we implement common 
            statutory schemes through uniform regulatory requirements.
 In the law enforcement arena, we will continue to reach out to 
            law-abiding citizens to get their input when we use 
            regulations to enforce statutory mandates so that law-
            enforcement compliance costs for businesses are kept to a 
            minimum.
 To improve the ability of U.S. companies and consumers to reap 
            the benefits of expanding international trade, we will 
            improve the efficiency of Customs operations, and finalize 
            regulations implementing the North American Free Trade 
            Agreement Implementation Act and its Customs modernization 
            provisions.
Consistent with these themes and priorities, and our statutory 
responsibilities to implement the laws as enacted by the Congress and 
signed by the President, we will continue to look for opportunities to 
delete unnecessary regulations, seek maximum public input in the 
promulgation of regulations, and improve our internal regulatory 
processes. A more detailed description of our regulatory priorities 
follows.
Statement of Regulatory Priorities
Departmental Offices
Office of the Under Secretary for Enforcement
Office of Financial Enforcement
The Bank Secrecy Act (BSA) authorizes the Secretary of the Treasury to 
issue regulations requiring financial institutions to maintain records 
and file reports determined to have a high degree of usefulness in 
criminal, tax, or regulatory proceedings. These regulations, codified 
at 31 CFR part 103, are developed by the Office of Financial 
Enforcement (OFE) and issued by the Director of the Financial Crimes 
Enforcement Network (FinCEN) in the Office of the Under Secretary for 
Enforcement. The purpose of these regulations is to combat financial 
crime, particularly money laundering.
OFE has sought to reduce the cost and burden of compliance with BSA 
regulations and to enhance the utility of those regulations to law 
enforcement. To this end, OFE is working to:

 Simplify the Currency Transaction Report (CTR);
 Streamline and simplify the BSA process for exempting certain 
            accounts from BSA currency transaction reporting 
            requirements;
 Clarify existing regulations defining non-bank financial 
            institutions that are subject to BSA regulations;
 Develop regulations requiring, and improve existing mechanisms 
            for, the reporting of suspicious transactions;
 Develop regulations requiring financial institutions to 
            implement ``Know Your Customer'' procedures; and
 Reduce the substantial recordkeeping requirements applicable 
            to the sale of money orders and other similar monetary 
            instruments.
To comply with the principles and philosophy of E.O. 12866, the 
Department has initiated extensive consultation with financial 
institutions and persons affected by BSA reporting and recordkeeping 
requirements to tailor regulations that impose the least amount of 
burden. In 1993, the Department convened an interagency Money 
Laundering Task Force staffed by experienced agents and regulators from 
Treasury bureaus with BSA compliance and money-laundering 
responsibilities. This Task Force undertook a comprehensive examination 
of Treasury's BSA regulatory programs, with a special focus on the 
manner in which Treasury exercises its BSA authority.
The Task Force made recommendations to the Bank Secrecy Act Advisory 
Group (Advisory Group) established by the Department, which consists of 
representatives from financial institutions and trades and businesses 
affected by the requirements of the BSA and section 6050I of the 
Internal Revenue Code of 1986, plus staff from Treasury, the Department 
of Justice, and the White House Office of National Drug Control Policy. 
The Advisory Group is considering alternative regulatory approaches and 
formulating recommendations concerning the BSA to Treasury policy 
officials.
During fiscal year 1995, OFE will accord priority to regulations 
concerning recordkeeping requirements for international and domestic 
funds transfers, requirements for the inclusion of certain information 
in funds transfer payment orders, and the implementation of new anti-
money laundering procedures and programs. These regulatory projects are 
described below.
In addition, OFE will determine whether to withdraw its proposed rules 
regarding the mandatory aggregation of currency transactions and filing 
of CTRs by magnetic media. Enhanced computer technology for the 
tracking and reporting of financial transactions may permit OFE to 
achieve the objectives of its proposed regulations through alternative 
means. These alternative methods may permit the design of rules that 
achieve the Department's regulatory objective in a more cost-effective 
manner, consistent with the principles of E.O. 12866.
Internal Revenue Service
The Internal Revenue Service (IRS) promulgates regulations that 
interpret and implement the Internal Revenue Code and related tax 
statutes. Consistent with E.O. 12866, the IRS adheres to the following 
principle in developing its regulations:

To carry out the tax policy determined by Congress fairly, impartially, 
reasonably, and practically, taking into account rational tax policy, the 
intent of Congress, the realities of relevant transactions, the need for 
the Government to administer the rules and monitor compliance, and the 
overall integrity of the Federal tax system.

The goal of the IRS is to make the regulations practical and user-
friendly by providing guidance that is as clear and simple as possible. 
Most IRS regulations interpret tax statutes to resolve ambiguities or 
fill gaps in the tax statutes.
During fiscal year 1995, the IRS' priorities will include the following 
regulations interpreting and implementing tax provisions contained in 
the Omnibus Budget Reconciliation Act of 1993 (OBRA 1993) and the North 
American Free Trade Agreement (NAFTA) Implementation Act:

Electronic Funds Transfer for Tax Deposits. Currently, certain 
            taxpayers are required to deposit taxes with an authorized 
            government depository (generally, a commercial bank or 
            savings institution or a Federal Reserve bank) by various 
            dates specified in regulations. Each deposit must be 
            accompanied by a form (Form 8109, Federal Tax Deposit 
            Coupon) which contains tax and taxpayer information. The 
            government depository processes the form and forwards it to 
            the appropriate IRS Service Center.
  NAFTA amended the Internal Revenue Code to authorize the issuance of 
            regulations that are necessary for the development and 
            implementation of an electronic funds transfer system to 
            replace the current form-based system for the collection of 
            depository taxes. The new system will be phased in over a 
            period of several years, beginning with fiscal year 1994. 
            (Note: A related regulation to be issued by the Financial 
            Management Service is described below.)
Substantiation of Certain Charitable Contributions. OBRA 1993 
            amended the Internal Revenue Code by not allowing a 
            deduction for a charitable contribution of $250 or more 
            unless the donor obtains contemporaneous written 
            acknowledgment of the contribution from the charitable 
            donee. This new substantiation requirement is effective for 
            contributions made after December 31, 1993. The regulations 
            implementing this section also will provide special 
            substantiation rules for contributions made by payroll 
            deduction.
Spousal Travel and Club Dues. OBRA 1993 limited the 
            deductibility of club dues, spousal travel expenses, and 
            business meals. However, this statutory change did not 
            answer the question of whether by denying the deduction to 
            the employer, the employee is required to recognize income. 
            The regulation will address this and other fringe benefit 
            questions.
Lobbying; Influencing Legislation. OBRA 1993 amended the 
            Internal Revenue Code to deny a deduction for amounts paid 
            or incurred in connection with influencing legislation 
            (other than local legislation) by communicating with 
            members or employees of the legislative and executive 
            branches who may participate in the formulation of 
            legislation. Proposed regulations defining the term 
            ``lobbying'' were issued in May 1994. Final regulations 
            will provide guidance to business taxpayers and certain 
            exempt organizations also subject to these rules by 
            defining activities of which the costs are not deductible.
Earnings Invested in Excess Passive Assets. This regulation 
            will implement a change in the Internal Revenue Code 
            (section 956A) added by OBRA 1993 which provides rules to 
            determine, with respect to the U.S. shareholder of a 
            controlled foreign corporation (CFC), the amount of 
            earnings of the CFC invested in excess passive assets. The 
            regulation also will provide guidance to taxpayers on the 
            meaning and scope of certain terms in the statute, such as 
            ``applicable earnings'' and ``passive assets,'' on the 
            application of section 956A with respect to groups of CFCs, 
            and on the computation of the section 956A amount.
Diesel Fuel Excise Tax. OBRA 1993 amended the Internal Revenue 
            Code (section 4081) by imposing an excise tax on diesel 
            fuel. OBRA 1993 provided an exemption from the excise tax 
            for certain diesel fuel; that fuel is dyed to aid 
            compliance in accordance with regulations issued under the 
            Internal Revenue Code. The regulation will provide guidance 
            on issues relating to the imposition of, and liability for, 
            the tax; the exemption for dyed diesel fuel; the back-up 
            tax on dyed diesel fuel used for a taxable purpose; and 
            credits and payments relating to taxed diesel fuel used for 
            a nontaxable purpose.
Mark-to-Market Accounting for Dealers in Securities. OBRA 1993 
            amended the Internal Revenue Code to require dealers in 
            securities to account for their securities by marking them 
            to market. The statutory definitions of the terms 
            ``security'' and ``dealer in securities'' are extremely 
            broad. Preliminary guidance in the form of temporary 
            regulations was provided in 1993. A regulation providing 
            additional guidance will be published in fiscal year 1995.
Conduit Financing Arrangements. This regulation will implement 
            section 7701(l) of the Internal Revenue Code, added by OBRA 
            1993. This new section provides that the Secretary of the 
            Treasury may issue regulations recharacterizing any 
            multiple-party financing transaction as a transaction 
            directly among any two or more of the parties where the 
            Secretary determines that a recharacterization is 
            appropriate to prevent avoidance of any tax imposed by the 
            Internal Revenue Code.
Special Passive Activity Loss (PAL) Rules. Section 469 of the 
            Internal Revenue Code disallows losses from passive 
            activities to the extent they exceed income from passive 
            activities. Traditionally, passive activities have included 
            (1) trade or business activities in which the taxpayer does 
            not materially participate and (2) rental activities 
            regardless of the level of the taxpayer's participation. 
            OBRA 1993 added section 469(c)(7) to the Internal Revenue 
            Code to modify the PAL rules relating to certain real 
            estate. This regulation will provide taxpayers with 
            guidance concerning the application of the new section.
The IRS also will accord priority during fiscal year 1995 to the 
following regulations:

Research or Experimental Expenditures. The Revenue 
            Reconciliation Act of 1989 amended section 174 of the 
            Internal Revenue Code with respect to research and 
            experimental expenditures. These regulations will be 
            revised to provide additional guidance to taxpayers and IRS 
            personnel regarding the term ``research and experimental 
            expenditures'' under section 174.
Triangular Corporate Reorganizations. Between 1954 and 1971, in 
            order to increase flexibility in structuring transactions, 
            Congress enacted laws allowing an acquiring corporation to 
            acquire the stock or assets of, or to merge into, a target 
            corporation in exchange for stock of the acquiring 
            company's parent corporation in a tax-free ``triangular'' 
            reorganization. The enabling legislation did not provide 
            guidance, however, as to the effect of the acquisition on 
            the parent corporation's basis in the stock of its 
            acquiring subsidiary. Proposed regulations were issued in 
            1981 setting forth the IRS position on the basis issue. In 
            a number of transactions since the enabling legislation, 
            and in some cases since the proposed regulations were 
            issued, taxpayers have taken positions that have 
            inappropriately enhanced the parent's basis in the stock of 
            the acquiring subsidiary following triangular 
            reorganizations. These regulations will provide guidance 
            regarding the acquiring parent's basis in the stock of the 
            acquiring subsidiary following a triangular reorganization.
Allocation of Interest Expense to U.S. Trade or Business of a 
            Foreign Corporation. Section 882(a) of the Internal Revenue 
            Code imposes a tax on the income of a foreign corporation 
            that is effectively connected with the conduct of a trade 
            or business within the United States (ECI). Section 882(c) 
            allows deductions and credits only to the extent that they 
            are connected with ECI, and further provides that the 
            proper allocation and apportionment of deductions shall be 
            determined as provided in regulations. Current regulations 
            prescribe rules for allocating interest expense, using an 
            approach that combines concepts of fungibility of funding 
            and tracing of interest expense. Proposed regulations 
            published in 1992 to replace existing rules better reflect 
            the current economic environment and changes in the law 
            since the original regulations were promulgated. The 
            proposed regulations, among other things, impose a 96 
            percent cap on a bank's actual debt-to-assets ratio; reduce 
            the elective fixed ratio to 93 percent; and eliminate the 
            separate currency pool method of determining the 
            appropriate interest rate for U.S. liabilities.
Modification of Debt Instruments. Under section 1001 of the 
            Internal Revenue Code and current regulations, gain or loss 
            is realized on an exchange of properties that differ 
            materially either in kind or extent. Under longstanding 
            authorities, a material change in the terms of a debt 
            instrument would result in a deemed exchange of properties 
            (the debt instruments) under section 1001. The regulation 
            will provide guidance on determining when a modification of 
            the terms of a debt instrument will rise to the level of a 
            deemed exchange. A proposed rule was issued in 1992.
Original Issue Discount; Debt Instruments With Contingent 
            Payments. Sections 1271-1275 of the Internal Revenue Code, 
            added by the Tax Reform Act of 1984, govern the taxation of 
            debt instruments with original issue discount (OID). These 
            sections provide that OID must be currently accrued by both 
            issuers and holders of debt instruments on a constant yield 
            basis, but the rules provided apply only to debt 
            instruments calling for payments of principal and interest 
            that are fixed both as to timing and amount. Section 
            1275(d) of the Internal Revenue Code authorizes the 
            issuance of regulations to address the taxation of OID on 
            debt instruments providing for contingent payments. This 
            regulation will address this issue.
Office of the Comptroller of the Currency
As the primary Federal regulator of national banks, the regulatory 
objective of the Office of the Comptroller of the Currency (OCC) is to 
supervise national banks as effectively and efficiently as possible. 
This objective includes maintaining the safety and soundness of the 
banking industry as a whole, providing support for the industry's 
efforts to provide credit and other financial services to its 
communities, and maintaining and enhancing a risk-focused, differential 
and proactive approach to the supervision of national banks.
A major priority of the OCC is the issuance of revised regulations 
implementing the Community Reinvestment Act (CRA). This project is 
described below. This rulemaking, undertaken jointly by the Federal 
banking agencies, furthers the President's priorities by:

 Expanding credit availability by clarifying the continuing and 
            affirmative obligation of banks to help meet the credit 
            needs of their communities, including low- and moderate-
            income areas;
 Clarifying compliance requirements and reducing unnecessary 
            regulatory burden by establishing, to the extent feasible, 
            objective assessment standards which minimize compliance 
            burden by focusing on performance; and
 Preserving safety and soundness by clarifying that neither the 
            regulation nor the CRA requires banks to make loans or 
            investments that result in losses or that are otherwise 
            inconsistent with safe and sound operations.
Additional OCC regulatory priorities during fiscal year 1995 include:

Concentration of Credit Risk and Risk of Nontraditional 
            Activities. This rulemaking, undertaken jointly by the 
            Federal banking agencies, would further bank safety and 
            soundness by requiring that adequate account is given to 
            concentration of credit risk and the risks of 
            nontraditional activities in assessing an institution's 
            capital adequacy.
Interest Rate Risk. This rulemaking, undertaken jointly by the 
            Federal banking agencies, would further bank safety and 
            soundness by ensuring that interest rate risk is 
            effectively measured and monitored, and that adequate 
            capital is maintained for that risk.
Standards for Safety and Soundness. This rulemaking, undertaken 
            jointly by the Federal banking agencies, would further bank 
            safety and soundness by enabling the OCC to address 
            problems before they cause significant deterioration in the 
            financial condition of a bank.
Recourse Arrangements. This joint Federal banking agency 
            rulemaking will propose a multilevel approach that would 
            assess risk-based capital against all banking organizations 
            and thrift participants in certain asset securitizations 
            based upon their relative exposure to risk of loss from the 
            underlying assets. The relative exposure to risk of loss 
            would be determined through the use of credit ratings from 
            nationally recognized statistical rating organizations.
Office of Thrift Supervision
As the primary Federal regulator of the thrift industry, the regulatory 
objective of the Office of Thrift Supervision (OTS) is to effectively 
and efficiently supervise thrift institutions. This objective includes 
maintaining the safety and soundness of the thrift industry, providing 
support for the industry's efforts to provide credit and other 
financial services to its communities, particularly with respect to 
housing credit, and maintaining and enhancing a risk-focused, 
differential and proactive approach to the supervision of thrift 
institutions.
OTS strives to develop regulatory policies that provide flexibility to 
sufficiently capitalized, well-managed institutions while closely 
supervising problem institutions. Savings associations are encouraged 
to fulfill the housing needs of their communities, particularly the 
needs of lower- to moderate-income persons. The OTS has worked to 
improve the effectiveness of the Community Reinvestment Act (CRA) 
examination process, an issue of particular importance to the 
President.
Along with the other Federal banking agencies, the OTS has discouraged 
discriminatory lending practices in the industry through better 
education, enhanced examination detection techniques, and more 
aggressive enforcement of fair lending and Equal Credit Opportunity Act 
laws. The OTS seeks to improve financial monitoring capabilities by 
developing a more consistent, useful and streamlined financial 
monitoring system.
The OTS believes that good lending performance should be more actively 
encouraged and rewarded. Current risks in the industry should be 
promptly identified and addressed and enforcement actions should be 
monitored to ensure that they are commensurate with the severity of the 
problem.
Undercapitalized thrifts should be assisted in developing strategies 
for timely recapitalization. The OTS continues its efforts to reduce 
regulatory burden through the application of differential regulation, 
better coordination of interagency examinations, the establishment of 
parity among regulated financial institutions where appropriate, and 
utilization of prompt corrective action provisions.
A major priority of the OTS is the issuance of revised regulations 
implementing the Community Reinvestment Act (see discussion under 
Office of the Comptroller of the Currency). This regulatory project is 
described further.
Additional OTS regulatory priorities during fiscal year 1995 include:

Recourse Arrangements. This joint Federal banking agency 
            rulemaking will propose a multilevel approach that would 
            assess risk-based capital against all banking organizations 
            and thrift participants in certain asset securitizations 
            based upon their relative exposure to risk of loss from the 
            underlying assets. The relative exposure to risk of loss 
            would be determined through the use of credit ratings from 
            nationally recognized statistical rating organizations.
Management Interlocks. This regulatory project would amend the 
            existing OTS regulations implementing the Management 
            Interlocks Act to create two new exemptions. The exemptions 
            would permit two unaffiliated depository organizations that 
            serve the same relevant metropolitan statistical area or 
            community to share management officials when the 
            organizations control less than 20 percent of the deposits 
            in any area or community in which both depository 
            organizations are located.
Standards for Safety and Soundness. This rulemaking, undertaken 
            jointly by the Federal banking agencies, would further 
            thrift safety and soundness by enabling the OTS to address 
            problems before they cause significant deterioration in the 
            financial condition of a thrift.
Concentration of Credit Risk and Risk of Nontraditional 
            Activities: This rulemaking, undertaken jointly by the 
            Federal banking agencies, would further thrift safety and 
            soundness by requiring that adequate account is given to 
            concentration of credit risk and the risks of 
            nontraditional activities in assessing an institution's 
            capital adequacy.
United States Customs Service
The United States Customs Service is responsible for administering laws 
concerning the importation of goods into the United States. This 
includes inspecting imports, collecting applicable duties, overseeing 
the activities of persons and businesses engaged in importing, and 
enforcing the laws concerning smuggling and trafficking in contraband. 
The regulatory priorities of Customs for fiscal year 1995 are to 
facilitate procedures for legitimate commercial transactions and to 
provide further obstacles to the flow of narcotics and other contraband 
into the United States.
During fiscal year 1995, Customs plans to undertake several regulatory 
actions that will affect the traveling and importing public, customs 
brokers, carriers and commercial importers. Some of these actions will 
implement legislation relating to U.S. trade agreements and programs. 
Customs plans to finalize its interim regulations implementing the 
North American Free Trade Agreement (NAFTA) Implementation Act and to 
adopt regulations consistent with the General Agreement on Tariffs and 
Trade. Customs also plans to revise its current regulations to set 
forth uniform rules. Uniform rules will provide predictability and 
certainty for Customs and the trade community for determining the 
country of origin of merchandise under Customs and related laws, 
including for country-of-origin marking and duty assessment purposes.
Customs also plans actions to improve the efficiency of Customs 
operations. Under authority granted by the Customs Modernization 
provisions of the NAFTA Implementation Act, a number of regulatory 
actions will be undertaken enabling Customs to modernize the way it 
does business with the trade community. Consistent with the principles 
of E.O. 12866, the focus of many of these regulations will be the 
development of a more automated environment to expedite the entry, 
processing and release of commercial importations. These regulations 
will benefit the importing public by facilitating the work of Customs 
officers and the trade community. One of these regulations is discussed 
below:

Test Programs and Procedures. Customs will issue proposed 
            regulations to permit the Commissioner of Customs to 
            conduct limited test programs/procedures to implement the 
            National Customs Automation Program mandated under the 
            NAFTA Implementation Act. The test programs would be 
            conducted on a voluntary basis with certain eligible 
            members of the public, and offer the opportunity to 
            evaluate alternative approaches to achieving more efficient 
            and effective processing of passengers, carriers, and 
            merchandise. Test programs also may require that 
            participants be exempted from certain Customs regulations, 
            but only to the extent that the different requirements do 
            not affect the collection of revenue, public health, 
            safety, or law enforcement. This test program would achieve 
            many of the President's principles for regulation found in 
            E.O. 12866, including examining whether existing 
            regulations need to be changed to achieve the goals of new 
            regulations (required under the NAFTA Implementation Act).
Bureau of Alcohol, Tobacco and Firearms
The Bureau of Alcohol, Tobacco and Firearms (ATF) issues regulations to 
fulfill its statutory mandate to enforce the Federal laws relating to 
the manufacture and commerce of alcohol products, tobacco products, 
firearms and explosives. The primary ATF enforcement and regulatory 
missions are:

 Preventing illegal traffic in, and criminal use of, firearms;
 Assisting State, local and other Federal law enforcement 
            agencies by tracing firearms and explosives, assisting in 
            the investigation of crimes, and participating in law 
            enforcement task forces;
 Investigating violations of Federal explosives laws and arson-
            for-profit schemes;
 Issuing licenses and permits applicable to alcohol, tobacco, 
            firearms, and explosives industries;
 Ensuring compliance with and the collection of taxes 
            applicable to alcohol, tobacco, firearms and ammunition;
 Preventing commercial bribery and unfair trade practices in 
            the alcoholic beverage industry, including consumer 
            deception;
 Preventing the illicit manufacture and sale of alcoholic 
            beverages; and
 Assisting States in efforts to eliminate interstate 
            trafficking in, and the sale and distribution of cigarettes 
            in avoidance of State taxes.


During fiscal year 1995, ATF will accord priority to two regulations:

 Brady Law. The Brady Law (Pub. L. 103-159) provides a 5-day 
            waiting period before a firearms licensee can transfer a 
            handgun to a nonlicensee. Temporary regulations (including 
            a 90-day comment period) implementing the waiting period 
            and other provisions of the Brady Law were published on 
            February 14, 1994. Final regulations are expected to be 
            issued by December 1994.
Under E.O. 12866, ATF conducted extensive coordination with other 
Federal agencies, such as the FBI, prior to issuing its proposed rules. 
In addition, ATF contacted each State's Attorney General, State law 
enforcement agencies, and many local Chiefs of Police to get input on 
implementation issues. Finally, ATF also had contacts with the firearms 
wholesale and retail industries, and with other interested groups, 
prior to issuing the proposed regulations. This extensive outreach 
effort continues as ATF prepares the final Brady Law regulations.

Unfair Trade Practices Under the Federal Alcohol Administration 
            Act. On April 26, 1994, ATF published a proposed rule to 
            amend its trade practice regulations in response to the 
            1992 decision of the United States Court of Appeals for the 
            District of Columbia in Fedway Associates v. Department of 
            the Treasury (976 F.2d 1416). The proposed rule would add 
            standards for enforcing the exclusion element in the unfair 
            trade practice provisions under the Federal Alcohol 
            Administration Act (FAA). A final rule is expected to be 
            issued by December 1994.
Financial Management Service
Regulations of the Financial Management Service (FMS) are developed to 
improve Government financial management by linking program and 
financial management objectives, and by providing financial services, 
information, advice, and assistance. The FMS serves taxpayers, the 
Treasury Department and Federal program agencies, and provides support 
to government policy makers on financial management issues.
The regulatory priorities of the FMS for fiscal year 1995 further the 
President's goals of improving technology to streamline financial 
services, and of using electronic funds transfers to the maximum extent 
possible. As described below, the FMS plans to implement a new 
Electronic Federal Tax Payments System. This system will move certain 
tax payments to the Treasury more quickly and will eliminate paper 
processing, and at the same time address the risks associated with 
automated payment systems. (Note: A related regulation to be issued by 
the Internal Revenue Service is described above.)
In addition, the following regulation is a priority of the FMS during 
fiscal year 1995:

Automated Clearing House Standards. This regulatory project 
            would revise existing FMS regulations governing Automated 
            Clearing House (ACH) standards to use commercial sector 
            rules where feasible and to make the Government a receiver 
            of ACH payments. Consistent with E.O. 12866, these 
            revisions will speed the flow of funds to the Treasury and 
            ease the regulatory burden on private industry.
Bureau of the Public Debt
The Government Securities Act of 1986 (GSA), as amended, authorizes the 
Secretary of the Treasury to prescribe rules governing financial 
responsibility, the protection of customer funds and securities, and 
recordkeeping and reporting requirements for government securities 
brokers and dealers, including financial institutions. These rules are 
designed to prevent fraudulent and manipulative acts and practices, and 
to preserve the integrity, efficiency and liquidity of the government 
securities market. Under E.O. 12866, in developing these regulations 
the Department seeks to balance the benefits of regulation with the 
compliance costs imposed on the government securities market and its 
participants.
The GSA regulations establish a consistent regulatory approach for all 
government securities brokers and dealers, including securities firms 
and financial institutions, in a manner intended to minimize the 
creation of any competitive advantages for any class of firm. 
Consistent with the principles stated by the President in E.O. 12866, 
these regulations are being developed only after considering the 
cumulative burdens of existing regulations applicable to various 
broker/dealers, including financial institutions and are designed to 
minimize duplication or overlap with existing regulations. To help meet 
this objective, the Treasury actively consults with other regulatory 
organizations, including the Securities and Exchange Commission (SEC) 
and the bank regulators to better coordinate its activities in 
securities regulation.
During fiscal year 1995, priority will be accorded to the following 
regulations:

Holders of Large Positions in Treasury Securities. This 
            regulation will establish recordkeeping and reporting 
            requirements for holders of large positions in specific 
            Treasury securities in order to monitor the market impact 
            of concentrated holdings and to assist SEC investigations. 
            This regulation will be promulgated under the authority of 
            the Government Securities Act Amendments of 1993.
Risk Assessment. This regulation will require recordkeeping and 
            reporting, pursuant to authority in the Market Reform Act 
            of 1990, designed to assist the regulators in assessing the 
            risk to a specialized government securities broker/dealer 
            from its affiliates. This risk assessment regulation is a 
            companion rule to an existing SEC regulation.
_______________________________________________________________________
TREAS--Departmental Offices (DO)
            ___________________________________________________________
PRERULE STAGE
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135.  ANTI-MONEY LAUNDERING PROGRAMS
Legal Authority:


 31 USC 5318


CFR Citation:


 31 CFR 103


Legal Deadline:


None


Abstract:


This regulation would require financial institutions subject to the 
Bank Secrecy Act (BSA) to implement BSA compliance and anti-money 
laundering programs and procedures. These programs and procedures would 
include, among other things, customer identification procedures, 
enhanced recordkeeping, detection and reporting of suspicious 
transactions, and related training of financial institution personnel.


Statement of Need:


The Office of Financial Enforcement is examining regulatory changes to 
enhance the usefulness of the Bank Secrecy Act (BSA) to law enforcement 
agencies without imposing unnecessary burdens on institutions and 
businesses subject to the BSA. In this context, OFE is considering the 
development of a regulation, which would be issued for public comment, 
that may address the following issues affecting both banks and nonbank 
financial institutions subject to the BSA:


 Enhancing BSA compliance by establishing procedures for BSA 
            reporting and recordkeeping requirements, requiring the 
            designation of BSA compliance officers and the 
            establishment of training programs;
 Establishing a ``Know Your Customer'' requirement concerning 
            the identification and verification of identity of account 
            holders and beneficial owners, and customers conducting 
            significant business transactions and/or using safe deposit 
            facilities, including different identification and 
            verification requirements for different categories of 
            customers;
 Enhancing the reporting of suspicious activities by developing 
            procedures for (1) identifying and reporting suspicious 
            transactions or activity to appropriate authorities, and 
            (2) guidelines and training in the identification of 
            suspicious activity by various categories of activity and 
            personnel (e.g., tellers; commercial loan officers; wire 
            transfers); and
 Requiring institutions and businesses subject to the BSA to 
            (1) establish formal policies, procedures and controls for 
            their BSA compliance programs and (2) audit and test their 
            programs for BSA compliance.
Alternatives:


Under consideration is a wide range of alternative approaches to 
designing the enhanced compliance program, and the types of 
institutions that should be subject to these requirements.


Anticipated Costs and Benefits:


Because the components of this proposal are under development and the 
range of financial institutions that would be subject to these 
requirements has not been identified, the costs and benefits associated 
with this proposal cannot determined at this time.


Timetable:
_______________________________________________________________________
Action                                 DFR Cite

_______________________________________________________________________
ANPRM                                                          10/00/94
Small Entities Affected:


None


Government Levels Affected:


None


Agency Contact:
Peter G. Djinis
Director, Office of Financial Enforcement
Department of the Treasury
Annex, Room 3210
1500 Pennsylvania Avenue NW.
Washington, DC 20220
202 622-0400
RIN: 1505-AA51
_______________________________________________________________________
TREAS--DO
            ___________________________________________________________
FINAL RULE STAGE
            ___________________________________________________________
136. INTERNATIONAL AND DOMESTIC FUNDS TRANSFERS
Legal Authority:


 12 USC 1829b; 12 USC 1951 to 1959; 31 USC 5318


CFR Citation:


 31 CFR 103


Legal Deadline:


Final, Statutory, January 1, 1994, for international fundstransfers.


Abstract:


This document proposes to amend Treasury's regulations under the Bank 
Secrecy Act to require a bank or nonbank financial institution that 
acts as a transmittor's financial institution in a transmittal of funds 
to include certain information in the transmittal order when sending it 
to the receiving financial institution.


Statement of Need:


Money laundering is a vital component of drug trafficking and other 
criminal activity, and a significant amount of money laundering 
involves funds transfers. The number of wire transfers completed daily 
is substantial. In 1992, the average daily number of transfers over 
Fedwire was 270,000, with average daily dollar amounts of $800 billion 
and a peak daily dollar amount of over $1 trillion. Treasury and the 
Board of Governors of the Federal Reserve System (Board) have 
determined that reporting and recordkeeping requirements for 
international and domestic funds transfers would have a high degree of 
usefulness in criminal, tax, and regulatory investigations or 
proceedings.


In 1993, the Office of Financial Enforcement (OFE) issued two proposed 
regulations concerning recordkeeping requirements for international and 
domestic funds transfers and proposed requirements for the inclusion of 
certain information in funds transfer payment orders. The proposed rule 
concerning domestic funds transfers was issued jointly with the Board. 
These requirements will be particularly useful in tracing the proceeds 
of illegal activities and will assist in the identification and 
prosecution of individuals involved in such activities.


The proposed regulations would apply to insured depository 
institutions, brokers and dealers in securities, and businesses that 
provide money transmitting services. The proposed regulations would 
require these institutions and businesses to gather certain information 
regarding funds transfers and to include certain information in related 
payment orders. The specific information to be gathered would depend 
upon the role of an institution or business in a particular funds 
transfer.


Alternatives:


Although regulations governing the recordkeeping of international and 
domestic funds transfers are required by law, a range of options exists 
to accomplish regulatory objectives. In this context, the specific 
provisions of the proposed rules have been considered by Treasury's 
Money Laundering Task Force and the Bank Secrecy Act Advisory Group. 
These reviews, as well as comments received in response to the proposed 
rules, have identified a number of recommendations for improvements to 
the proposed rules. These recommendations are under consideration and 
will be taken into account in developing a final rule.


Anticipated Costs and Benefits:


The rules will have a high degree of usefulness in criminal, tax, and 
regulatory investigations or proceedings. The regulation will impose 
recordkeeping costs on approximately 60,000 institutions and 
businesses, which OFE estimates will average 274 hours annually for 
each such institution and business.


Timetable:
_______________________________________________________________________
Domestic Funds Transfers (RIN 1505-AA46)
NPRM 08/31/93 (58 FR 46021)
NPRM Comment Period End 10/04/93 (58 FR 46021)
Final Action 00/00/00
International Funds Transfers (RIN 1505-AA37)
ANPRM 10/31/89 (54 FR 45769)
ANPRM Comment Period End 01/02/90 (54 FR 45770)
NPRM 10/15/90 (55 FR 41696)
NPRM Comment Period End 11/29/90 (55 FR 41696)
Comment Period Extended to 01/15/91 12/05/90 (55 FR 50192)
Second NPRM 08/31/93 (58 FR 46014)
Second NPRM Comment Period End 10/04/93 (58 FR 46014)
Final Action 00/00/00
Small Entities Affected:


None


Government Levels Affected:


None


Agency Contact:
Peter Djinis
Director, Office of Financial Enforcement
Department of the Treasury
Annex, Room 3210
1500 Pennsylvania Avenue NW.
Washington, DC 20220
202 622-0400
RIN: 1505-AA46
_______________________________________________________________________
TREAS--Financial Management Service (FMS)
            ___________________________________________________________
PRERULE STAGE
            ___________________________________________________________
137. TREASURY TAX AND LOAN DEPOSITARIES
Legal Authority:


 26 USC 6302(h); 31 USC 321; 31 USC 323; 31 USC 3122; 31 USC 3301; 31 
USC 3302; 31 USC 3720; 12 USC 90; 12 USC 265; 12 USC 391


CFR Citation:


 31 CFR 203 (Revision)


Legal Deadline:


None


Abstract:


Revision of 31 CFR part 203 is in accordance with the development and 
implementation of the Electronic Federal Tax Payment System. This will 
replace the current Federal Tax Deposit (TT&L) System. The benefits 
will be the elimination of 1 day float and Federal Tax Deposit coupons 
for TT&L deposits. This rule will also mandate Electronic Funds 
Transfer for Federal tax payments.


Statement of Need:


The collection of taxes by an electronic funds transfer system is 
required by statute, which also directs the Secretary of the Treasury 
to prescribe regulations for the development and implementation of the 
system. Regulations to be issued by the FMS are necessary for the 
orderly execution of the system; a companion regulation will be issued 
by the Internal Revenue Service.


The current system for the collection of taxes is based on paper 
coupons: Financial institution depositaries collect the deposits and 
process paper coupons. The regulation will reflect the change from a 
paper based system to an electronic funds transfer system, thus 
eliminating the need for the paper coupons.


Summary of the Legal Basis:


The Treasury Department is directed by law to increase the percentage 
of certain taxes that are collected using electronic funds transfer 
each fiscal year, beginning with a 3 percent threshold in fiscal year 
1994. This requirement will be implemented by the Financial Management 
Service.


Alternatives:


The electronic funds transfer method is required by statute. The 
technical configuration of the system has not been determined. The FMS 
will solicit alternatives from affected industry sources.


Anticipated Costs and Benefits:


As a result of the new system, the Federal Government will realize a 
net benefit by accelerating the deposit of certain taxes to the 
Treasury. The FMS estimates this benefit to be $813.3 million over a 6-
year period beginning in fiscal year 1995, and $178.4 million annually 
thereafter. In addition, the FMS estimates that the change will 
eliminate $6.2 million annually in payments to financial institutions 
for paper coupon processing. Because the technical configuration of the 
system has not been determined, the associated development costs are 
unknown.


Risks:


FMS evaluates and establishes policies and practices to protect the 
Federal Government from several types of automated payment risk. The 
first type of risk is operational, or systemic, risk requiring accurate 
and secure operating practices, encryption of payment related data 
transmissions, redundant facilities, and backup and recovery 
procedures. A second risk is credit, or settlement, risk associated 
with the financial condition of parties to the transaction. The third 
risk is fraud. FMS establishes regulatory policies to limit the Federal 
Government's liabilities in relation to the second and third areas of 
risk. In addition, FMS controls access for settlement of automated 
funds directly to Treasury's account at the Federal Reserve. Further, 
FMS establishes and monitors adherence to stringent requirements for 
financial services providers supporting Federal automated payments.


Timetable:
_______________________________________________________________________
Action                                 DFR Cite

_______________________________________________________________________
ANPRM                                                          11/00/94
ANPRM Comment Period End                                       12/00/94
Small Entities Affected:


Businesses


Government Levels Affected:


Undetermined


Agency Contact:
A. J. Madden
Director
Cash Management Policy & Planning Division
Department of the Treasury
Financial Management Service
Room 420
401 14th Street SW.
Washington, DC 20227
202 874-6657
RIN: 1510-AA37
_______________________________________________________________________
TREAS--Comptroller of the Currency (OCC)
            ___________________________________________________________
PROPOSED RULE STAGE
            ___________________________________________________________
138. COMMUNITY REINVESTMENT ACT REGULATION
Legal Authority:


 12 USC 21; 12 USC 22; 12 USC 26; 12 USC 27; 12 USC 30; 12 USC 36; 12 
USC 93a; 12 USC 161; 12 USC 215; 12 USC 481; 12 USC 1814; 12 USC 1816; 
12 USC 1818; 12 USC 1828(c); 12 USC 2901 to 2907


CFR Citation:


 12 CFR 25


Legal Deadline:


None


Abstract:


The OCC, with the other Federal financial regulators, is engaged in an 
overall review of the Community Reinvestment Act Regulations. The 
agencies would provide clearer guidance to financial institutions on 
the nature and extent of their CRA obligations and how their 
performance will be assessed. The agencies intend to eliminate 
unnecessary burden, enhance public protection, promote compliance, and 
clarify the regulation. Further, to implement the President's Credit 
Availability Program, the OCC will review this regulation and remove 
any provisions that frustrate bank efforts to make credit available, 
consistent with safety and soundness considerations.


Statement of Need:


The Community Reinvestment Act (CRA) was enacted to encourage federally 
regulated financial institutions to meet the credit needs of their 
communities, with particular emphasis on low- and moderate-income 
areas. The CRA provides that regulations ``to carry out the purposes of 
this chapter shall be published by each appropriate Federal financial 
supervisory agency'' (12 U.S.C. 2905). The agencies originally 
promulgated such regulations on October 12, 1978.


The CRA regulatory examination and enforcement system has been the 
subject of much criticism. Financial institutions have complained that 
the examination process promotes excessive paperwork at the expense of 
providing loans, services and investments. In addition, they have 
expressed the view that policy guidance from the supervisory agencies 
is unclear and that examination standards are applied inconsistently. 
Community, consumer and other groups have agreed with the industry that 
there are inconsistencies in CRA evaluations and that current 
examinations overemphasize process and underemphasize performance.


The goal of the proposed revisions to the CRA regulations is to provide 
clear guidance to institutions on the nature and extent of their CRA 
obligation and the methods by which the agencies will assess and 
enforce that obligation. The proposed CRA examination system will 
minimize compliance burden while encouraging improved performance, with 
an emphasis on objective performance standards. The proposed regulation 
would substitute for the current, process-based assessment factors a 
new evaluation system that rates institutions based on their actual 
performance in meeting community credit needs. In particular, the 
proposed system would evaluate the degree to which an institution is 
providing loans, branches and other services, and investments to low- 
and moderate-income people and geographies. The regulation also would 
clarify how an institution's CRA performance is considered in the 
corporate application process.


Alternatives:


A series of seven public hearings was held across the country to seek 
input for developing the proposed rule. Most participants rejected a 
formulaic approach to CRA. Several commenters suggested the development 
of strategic plans for CRA performance by financial institutions in 
conjunction with the communities in which they operate. Some commenters 
also discussed the concept of making enforceable agreements between 
financial institutions and community groups or supervisory agencies the 
central focus of the CRA process. After considering the concerns 
raised, the proposed rule presents a more objective and enforceable 
approach to evaluating CRA performance, consistent with the parameters 
set forth by the President.


Based on comments received to the proposed rule, the agencies are 
considering a number of new alternatives, including, for example, 
modification of the performance-based measures in the proposal, changes 
to the data collection requirement, and provision of more detail on the 
strategic plan option.


Anticipated Costs and Benefits:


The overall benefit of the rule is an assessment process that is less 
burdensome for many institutions and that produces more results for the 
local communities they serve. It is also expected that examiner 
training, interagency coordination on application standards, 
performance of examinations, assignment of ratings and the use of 
enforcement tools will be improved. Access to Home Mortgage Disclosure 
Act and CRA data is expected to be improved.


The new standards and procedures may cause institutions to incur a 
modest increase in operating costs. The proposed additional data 
collection may also serve to increase costs, though any such increase 
is estimated to be minimal. Although the agencies anticipate that 
additional examiner training will be necessary in order to implement 
the rule, such training will be integrated into existing training 
programs at minimal cost.


Timetable:
_______________________________________________________________________
Action                                 DFR Cite

_______________________________________________________________________
NPRM            58 FR 67466                                    12/21/93
NPRM Comment Per59 FR 5138ed to 02/22/94                       02/03/94
NPRM Comment Per58 FR 67466                                    02/22/94
Second NPRM     59 FR 51232                                    10/07/94
Second NPRM Comment Period End                                 11/21/94
Final Action                                                   00/00/00
Small Entities Affected:


None


Government Levels Affected:


None


Agency Contact:
Matthew Roberts
Special Counsel
Department of the Treasury
Comptroller of the Currency
Community and Consumer Law Division
250 E Street SW.
Washington, DC 20219
202 874-5200
RIN: 1557-AB32
_______________________________________________________________________
TREAS--Office of Thrift Supervision (OTS)
            ___________________________________________________________
PROPOSED RULE STAGE
            ___________________________________________________________
139. COMMUNITY REINVESTMENT ACT
Legal Authority:


 12 USC 1462a; 12 USC 1463; 12 USC 1464; 12 USC 1467a; 12 USC 1814; 12 
USC 1816; 12 USC 1818; 12 USC 1828(c); 12 USC 2901 to 2907


CFR Citation:


 12 CFR 563e


Legal Deadline:


None


Abstract:


The Federal banking agencies have proposed revisions to their 
regulations concerning the Community Reinvestment Act. The revisions 
are intended to implement the continuing and affirmative obligation of 
regulated financial institutions to help meet the credit needs of their 
communities, including low and moderate-income areas, consistent with 
safe and sound operations and to provide guidance on how the agencies 
assess the performance of institutions in meeting that obligation. The 
rule is intended to provide clarification regarding the nature and 
extent of the CRA obligation of financial institutions and the methods 
by which institutions' compliance with that obligation will be 
evaluated.


For a further description of this action, see RIN 1557-AB32 under the 
Office of the Comptroller of the Currency above.


Timetable:
_______________________________________________________________________
Action                                 DFR Cite

_______________________________________________________________________
NPRM            58 FR 67466                                    12/21/93
NPRM Comment Per59 FR 5138                                     03/24/94
Second NPRM     59 FR 51232                                    10/07/94
Second NPRM Comment Period End                                 11/21/94
Small Entities Affected:


None


Government Levels Affected:


None


Agency Contact:
Theresa Stark
Program Analyst
Specialized Programs
Department of the Treasury
Office of Thrift Supervision
1700 G Street NW.
Washington, DC 20552
202 906-7054
RIN: 1550-AA69
BILLING CODE 4810-25-F