Each depositor insured to at least $250,000 per insured bank



Home > News & Events > Financial Institution Letters




Inactive Financial Institution Letters

[Federal Register: July 28, 2000 (Volume 65, Number 146)]
[Rules and Regulations]               
[Page 46356-46361]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr28jy00-4]                         

=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF THE TREASURY

Financial Crimes Enforcement Network

31 CFR Part 103

RIN 1506-AA23

 
Amendment to the Bank Secrecy Act Regulations--Exemptions From 
the Requirement to Report Transactions in Currency; Interim Rule

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

ACTION: Interim rule with request for comments.

-----------------------------------------------------------------------

SUMMARY: Rules previously issued under the Bank Secrecy Act established 
new procedures for exemption of transactions of retail and other 
businesses from the requirement that depository institutions report 
transactions in currency in excess of $10,000. The interim rule (the 
``Interim Rule'') contained in this document modifies those procedures 
so that they will also apply to transactions involving money market 
deposit accounts used for business purposes. The Interim Rule also 
makes certain technical changes in the exemption procedures. 
Modification of the exemption procedures is another step in the 
Department of the Treasury's continuing program to increase the cost-
effectiveness of the counter-money laundering policies of the 
Department of the Treasury.

DATES: Effective Date: July 31, 2000.
    Comment Deadline: Comments must be received by September 26, 2000.

ADDRESSES: Written comments should be submitted to: Office of Chief 
Counsel, Financial Crimes Enforcement Network, Department of the 
Treasury, 2070 Chain Bridge Road, Vienna, VA 22182, Attention: Interim 
Rule--MMDA. Comments also may be submitted by electronic mail to the 
following Internet address: ``regcomments@fincen.treas.gov'' with the 
caption ``Attention: Interim Rule--MMDA.'' Comments may be inspected at 
the Department of the Treasury between 10 a.m. and 4 p.m., in the 
FinCEN reading room at the Franklin Court Building, 14th and L Streets, 
NW., Washington, DC. Persons wishing to inspect the comments submitted 
should request an appointment by telephoning (202) 354-6400.

[[Page 46357]]


FOR FURTHER INFORMATION CONTACT: Peter Djinis, Executive Assistant 
Director (Regulatory Policy), FinCEN, (703) 905-3930; Christine E. 
Carnavos, Assistant Director (Office of Compliance and Regulatory 
Enforcement), FinCEN, (1-800) 949-2732; Stephen R. Kroll, Chief 
Counsel, Cynthia L. Clark, Deputy Chief Counsel, and Albert R. Zarate 
and Christine L. Schuetz, Attorney-Advisors, Office of Chief Counsel, 
FinCEN, (703) 905-3590.

SUPPLEMENTARY INFORMATION:

I. Background

A. Statutory Provisions

    The Bank Secrecy Act, Titles I and II of Public Law 91-508, as 
amended, codified at 12 U.S.C. 1829b, 12 U.S.C. 1951-1959, and 31 
U.S.C. 5311-5330, authorizes the Secretary of the Treasury, inter alia, 
to issue regulations requiring financial institutions to keep records 
and file reports that are determined to have a high degree of 
usefulness in criminal, tax, and regulatory matters, and to implement 
counter-money laundering programs and compliance procedures. 
Regulations implementing the Bank Secrecy Act appear at 31 CFR Part 
103. The authority of the Secretary to administer the Bank Secrecy Act 
has been delegated to the Director of FinCEN.
    The reporting by financial institutions of transactions in currency 
in excess of $10,000 has long been a major component of the Department 
of the Treasury's implementation of the Bank Secrecy Act. The reporting 
requirement is imposed by 31 CFR 103.22, a rule issued under the broad 
authority granted to the Secretary of the Treasury by 31 U.S.C. 5313(a) 
to require reports of domestic coin and currency transactions.
    The provisions of 31 U.S.C. 5313(d) through (g), added to the Bank 
Secrecy Act in 1994,\1\ concern the exemption, from the currency 
transaction reporting requirements, of transactions by certain 
customers of depository institutions.\2\ 31 U.S.C. 5313(d) (sometimes 
called the ``mandatory exemption'' provision) states that the Secretary 
of the Treasury shall exempt a depository institution from the 
requirement to report currency transactions with respect to 
transactions between the depository institution and four specified 
categories of customers, while 31 U.S.C. 5313(e) (sometimes called the 
``discretionary exemption'' provision) authorizes the Secretary of the 
Treasury to exempt a depository institution from the requirement to 
report transactions in currency between it and a qualified business 
customer.\3\
---------------------------------------------------------------------------

    \1\ See section 402 of the Money Laundering Suppression Act of 
1994 (the ``Money Laundering Suppression Act''), Title IV of the 
Riegle Community Development and Regulatory Improvement Act of 1994, 
Public Law 103-325 (September 23, 1994).
    \2\ Section 402(b) of the Money Laundering Suppression Act 
states simply that in administering the new statutory exemption 
provisions: the Secretary of the Treasury shall seek to reduce, 
within a reasonable period of time, the number of reports required 
to be filed in the aggregate by depository institutions pursuant to 
section 5313(a) of title 31 * * * by at least 30 percent of the 
number filed during the year preceding [September 23, 1994,] the 
date of enactment of [the Money Laundering Suppression Act]. The 
enactment of 31 U.S.C. 5313(d) through (g) reflects a Congressional 
intention to ``reform * * * the procedures for exempting 
transactions between depository institutions and their customers.'' 
See H.R. Rep. 103-652, 103d Cong., 2d Sess. 186 (August 2, 1994).
    \3\ For additional information about the terms of 31 U.S.C. 
5313(e)-(g), see 63 FR 50147, 50148 (September 21, 1998).
---------------------------------------------------------------------------

    A ``qualified business customer,'' for purposes of the 
discretionary exemption provision, is a business that

    (A) maintains a transaction account (as defined in section 
19(b)(1)(C) of the Federal Reserve Act) at the depository 
institution;
    (B) frequently engages in transactions with the depository 
institution which are subject to the reporting requirements of 
subsection (a); and
    (C) meets criteria which the Secretary determines are sufficient 
to ensure that the purposes of this subchapter are carried out 
without requiring a report with respect to such transactions.

31 U.S.C. 5313(e)(2). The Secretary of the Treasury is required to 
establish, by regulation, the criteria for granting and maintaining an 
exemption for qualified business customers, see 31 U.S.C. 5313(e)(3), 
as well as guidelines for depository institutions to follow in 
selecting customers for exemption. See 31 U.S.C. 5313(e)(4)(A).

B. Regulatory Provisions

    The reformed exemption procedures called for by 31 U.S.C. 5313(d)-
(g) are now found in the Bank Secrecy Act regulations at 31 CFR 
103.22(d). The procedures are the result of a four-part rulemaking \4\ 
and are designed to permit streamlined exemption from the reporting 
requirements of transactions by most depository institution customers 
that have recurring needs for large amounts of currency to support 
their commercial enterprises in the United States. (Certain non-
publicly-traded companies are ineligible for exemption under the 
procedures, as the statute contemplates.\5\ See 31 CFR 
103.22(d)(6)(viii).)
---------------------------------------------------------------------------

    \4\ An interim rule (with a request for comments) implementing 
the mandatory exemption provision (in what was called ``Phase I'' of 
exemption reform, aimed primarily at larger national and regional 
customers of depository institutions) was published on April 24, 
1996. 61 FR 18204. A final rule based on the Phase I interim rule 
was published on September 8, 1997, 62 FR 47141, as 31 CFR 
103.22(h), and a proposed rule implementing the discretionary 
exemption provision (``Phase II'' of exemption reform, aimed at non-
publicly-traded retail and other businesses) was published on the 
same day. 62 FR 47156. The comment period for the proposed rule was 
extended on November 28, 1997, 62 FR 63298, and a final rule based 
on the Phase II proposal was published on September 21, 1998. 63 FR 
50147. The final rule containing the Phase II provisions completely 
restated the language of 31 CFR 103.22; as part of that restatement, 
the Phase I provisions (previously found in 31 CFR 103.22(h)) and 
the Phase II provisions were combined in new 31 CFR 103.22(d).
    \5\ 31 U.S.C. 5313(e)(4)(B) provides that the required 
regulatory exemption guidelines may include a description of the 
type of businesses for which no exemption will be granted under the 
discretionary exemption provision. The ineligible classes of 
customer are listed at note 8, see infra.
---------------------------------------------------------------------------

Classes of Exempt Persons.
    The reformed exemption procedures apply to depository institution 
customers who fall within one of the classes of exempt persons 
described in 31 CFR 103.22(d)(2)(i)-(vii). The classes of exempt 
persons are:
    (i) Other banks operating in the United States;
    (ii) Government departments and agencies;
    (iii) Certain entities that exercise governmental authority;
    (iv) Entities whose equity interests are listed on one of the major 
national stock exchanges;
    (v) Certain subsidiaries of entities whose equity interests are 
listed on one of the major national stock exchanges;
    (vi) ``Non-listed businesses,'' as defined and described more fully 
below; and
    (vii) ``Payroll customers,'' as defined and described more fully 
below. \6\
---------------------------------------------------------------------------

    \6\ Generally, a depository institution seeking to exempt 
transactions by an eligible customer from the currency transaction 
reporting requirement need only make a one-time designation 
identifying the exempting depository institution, the exempt 
customer, and the category of exempt person into which the customer 
falls. The designation is made on Treasury Form TD F 90-22.53. As 
explained below, the Interim Rule changes the language of 31 CFR 
103.22(d)(3)(i) and (d)(5)(ii) to specify the use of Form TD F 90-
22.53.
---------------------------------------------------------------------------

Non-Listed Businesses and Payroll Customers
    Under the exemption rules, a ``non-listed business'' is any other 
commercial enterprise (i.e., an enterprise that is neither a bank, \7\ 
a government agency, a publicly-traded company, nor a subsidiary of a 
publicly-traded company

[[Page 46358]]

and that is not ineligible for exemption \8\) that
---------------------------------------------------------------------------

    \7\ As used in 31 CFR 103.22, as elsewhere in the Bank Secrecy 
Act regulations, the term ``bank'' includes all of the classes of 
depository institution listed at 31 CFR 103.11(c).
    \8\ Non-listed businesses ineligible for exemption are 
businesses engaged primarily in one or more of the following 
activities: serving as financial institutions or agents of financial 
institutions of any type; purchase or sale to customers of motor 
vehicles of any kind, vessels, aircraft, farm equipment or mobile 
homes; the practice of law, accountancy, or medicine; auctioning of 
goods; chartering or operation of ships, buses, or aircraft; gaming 
of any kind (other than licensed parimutuel betting at race tracks); 
investment advisory services or investment banking services; real 
estate brokerage; pawn brokerage; title insurance and real estate 
closing; trade union activities; and any other activities that may 
be specified by FinCEN. 31 CFR 103.22(d)(6)(viii).
---------------------------------------------------------------------------

    (A) Has maintained a transaction account at the bank for at least 
12 months;
    (B) Frequently engages in transactions in currency with the bank in 
excess of $10,000; and
    (C) Is incorporated or organized under the laws of the United 
States or a State, or is registered as and eligible to do business 
within the United States or a State.

31 CFR 103.22(d)(2)(vi). Such an enterprise is an exempt person only 
``[t]o the extent of its domestic operations.'' Id. The addition of 
non-listed businesses as a category of exempt person was intended to 
make eligible for the reformed exemption procedures transactions of all 
established depository institution customers (other than ineligible 
companies) not included within the scope of the mandatory exemption 
provision.
    A ``payroll customer,'' under the exemption rules, is any other 
person (i.e., a person not otherwise covered under the exempt person 
definitions) that
    (A) Has maintained a transaction account at the bank for at least 
12 months;
    (B) Operates a firm that regularly withdraws more than $10,000 in 
order to pay its United States employees in currency; and
    (C) Is incorporated or organized under the laws of the United 
States or a State, or is registered as and eligible to do business 
within the United States or a State.

31 CFR 103.22(d)(2)(vii). A payroll customer is an exempt person 
``[w]ith respect solely to withdrawals for payroll purposes.'' Id.
The ``Transaction Account'' Limitation
     As indicated above, a person must maintain a ``transaction 
account'' with a depository institution in order to be treated as a 
``non-listed business'' or ``payroll customer'' for purposes of the 
reformed exemption procedures. In addition, non-listed businesses and 
payroll customers may be treated as exempt persons ``only to the extent 
of [their] eligible transaction accounts'' under the present language 
of the reformed procedures. See 31 CFR 103.22(d)(6)(ix).
    A ``transaction account'' for this purpose is an account described 
in section 19(b)(1)(C) of the Federal Reserve Act.\9\ Section 
19(b)(1)(C) of the Federal Reserve Act, codified at 12 U.S.C. 
461(b)(1)(C), in turn, states that a transaction account is
---------------------------------------------------------------------------

    \9\ See 31 U.S.C. 5313(e)(2)(A) (defining a qualified business 
customer (whose transactions the Secretary of the Treasury is 
authorized to exempt from currency transaction reporting by 31 
U.S.C. 5313(e)(1)), as a business which, among other things, 
``maintains a transaction account (as defined in section 19(b)(1)(c) 
of the Federal Reserve Act) at the depository institution.'').

a deposit or account on which the depositor or account holder is 
permitted to make withdrawals by negotiable or transferable 
instrument, payment orders of withdrawal, telephone transfers, or 
other similar items for the purpose of making payments or transfers 
to third persons or others. Such term includes demand deposits, 
negotiable order of withdrawal accounts, savings deposits subject to 
automatic transfers, and share draft accounts.
Money Market Deposit Accounts
    Given the operative definition of a transaction account, the 
exemption procedures published on September 21, 1998, do not extend to 
transactions by non-listed businesses or payroll customers that involve 
so-called money market deposit accounts.\10\ See 12 CFR 204.2(d)(2) (in 
implementing section 19(b)(1)(C) of the Federal Reserve Act, defining a 
money market deposit account as a ``savings deposit'') and 12 CFR 
204.2(e) (defining a transaction account to exclude ``savings deposits 
or accounts described in paragraph (d)(2) of this section even though 
such accounts permit third party transfers''). FinCEN noted this 
limitation when it proposed the new exemption procedures for non-listed 
businesses and payroll customers, see 62 FR 47156, 47162 (September 8, 
1997), and again when it issued the final rule containing those 
procedures. See 63 FR 50147, 50154 (September 21, 1998). At the same 
time, FinCEN indicated that it would entertain requests for relief if 
the transaction account limitation proved to be unduly difficult to 
apply. Id.
---------------------------------------------------------------------------

    \10\ Money market deposit accounts were established by the Garn-
St. Germain Act of 1982, as interest-bearing accounts comparable to 
money market mutual funds upon which a limited number of checks may 
be drawn or other withdrawals made.
---------------------------------------------------------------------------

II. The Interim Rule

Modification of the Transaction Account Limitation

    A number of depository institutions have contacted FinCEN to 
request reconsideration of the decision to limit the reformed exemption 
procedures for non-listed businesses and payroll customers to 
transactions in currency involving transaction accounts. The 
transaction account limitation has been asserted to limit unnecessarily 
the ability of banks to make use of the procedures within their 
intended scope, for two reasons.
    The first reason is that smaller businesses often place their 
receipts in money market deposit accounts to obtain some return on 
their funds until those funds are necessary for use in their 
businesses. Use of money market deposit accounts for this purpose 
reflects the fact that businesses are not generally permitted to hold 
interest-bearing checking accounts.\11\ To satisfy their check-writing 
needs, businesses simply transfer funds from their money market deposit 
accounts to their transaction (that is, their checking) accounts as 
necessary.
---------------------------------------------------------------------------

    \11\ Prior to the passage of the Monetary Control Act of 1980, 
all interest payments on demand deposits were prohibited. The 
Monetary Control Act established, among other things, negotiable 
order of withdrawal (``NOW'') accounts, to allow customers to earn 
interest on balances against which checks may be drawn. However, 
businesses are not permitted to hold NOW accounts.
---------------------------------------------------------------------------

    The second reason flows from the first. Several banks have 
indicated that their computerized systems for tracking the currency 
transactions of their business customers do not distinguish between 
transaction accounts and money market accounts. Thus, an exemption 
system that does not extend to money market deposit accounts cannot be 
used at all for such customers (even for transaction accounts) without 
either an expensive system change or a time-intensive manual research 
process. The banks state that, faced with these choices, they would opt 
simply to file currency transaction reports and not use the exemption 
procedures at all for the customers in question.
    The transaction account limitation was intended to help ensure that 
streamlined exemption procedures were available only for routine uses 
of currency by legitimate ongoing commercial enterprises. Deposits and 
withdrawals of currency from money market accounts by enterprises in 
the circumstances described above are within the classes of 
transactions for which the new exemption procedures were designed. For 
that reason, the

[[Page 46359]]

Interim Rule modifies the new exemption procedures so that they will 
apply to the transactions of non-listed businesses and withdrawals for 
payroll purposes by payroll customers that involve a money market 
deposit account, within the meaning of section 19(b)(1)(C) of the 
Federal Reserve Act and that section's implementing regulations. See 12 
CFR 204.2(d)(2).
    The change made by the Interim Rule, however, as noted in more 
detail below, does not alter the definition of an exempt person itself. 
Thus, for example, a non-listed business may only be treated as an 
exempt person to the extent that it has maintained a transaction 
account at the depository institution for at least twelve months. See 
31 CFR 103.22(d)(2)(vi). Moreover, under the new exemption procedures 
applicable to non-listed businesses and payroll customers, as modified 
by the Interim Rule, money market deposit accounts maintained other 
than as part of a commercial enterprise are not eligible for exemption. 
See 31 CFR 103.22(d)(2)(vi).
    FinCEN is requesting comments on the expansion of the exemption 
procedures made by the Interim Rule. Commenters may wish to address any 
of the issues discussed above (for example, the fact that the changes 
made by the Interim Rule do not permit treatment as an exempt person of 
a customer whose only relationship with a bank is maintenance of a 
money market deposit account), or other matters related to the subject 
of the Interim Rule (for example, whether other savings accounts should 
be treated in the same manner as money market deposit accounts). The 
comments should include as much statistical or other information as 
possible about the terms and business or commercial uses of particular 
types of accounts that are discussed in any comments. Comments should 
also explain the reasons that any additional modifications to the 
exemption procedures sought by the comments are appropriate to 
accomplish the goals of the procedures and are not subject to the risk 
of extending the exemption procedures beyond their intended scope.
    The provisions of the Interim Rule concerning money market deposit 
accounts become effective on July 31, 2000. Although FinCEN believes 
that the definition of a ``transaction account'' has been made clear 
heretofore, for reasons of administrative convenience, FinCEN will not 
generally require backfiling regarding any exemption granted based on 
the mistaken assumption that the term ``transaction account'' included 
money market deposit accounts.

Conforming Changes Based Upon Modification of Transaction Account 
Limitation

    The Interim Rule makes several conforming changes to the exemption 
procedures based on the amendment to the transaction account limitation 
described above. First, the Interim Rule extends the exemption 
procedures to all exemptible accounts of a non-listed business or 
payroll customer, rather than just those customers' transaction 
accounts. Correspondingly, the term ``exemptible accounts'' is defined, 
for purposes of non-listed businesses and payroll customers, to include 
both transaction accounts and money market deposit accounts. (These 
changes are reflected in the new language of 31 CFR 103.22(d)(6)(ix).) 
Lastly, the Interim Rule substitutes the term ``exemptible account'' 
for the term ``transaction account'' for purposes of the terms of the 
exemption procedures concerning aggregation. Thus, when determining the 
qualification of a customer as a non-listed business or payroll 
customer, a bank may treat all exemptible accounts (rather than just 
transaction accounts) of the customer as a single account.

Reference to Treasury Form TD F 90-22.53

    Since the reformed exemption procedures were published on September 
21, 1998, 63 FR 50149, a new form, Treasury Form TD F 90-22.53, has 
been designated by FinCEN for use by banks when filing both the initial 
and biennial renewal of designation of exempt persons. Thus, the 
Interim Rule amends the exemption procedures to require the use of 
Treasury Form TD F 90-22.53 in that regard.

III. Specific Provisions

A. 103.22(d)(2)(vi)--Non-listed Businesses

    The Interim Rule amends the language of 31 CFR 103.22(d)(2)(vi) to 
state that a non-listed business may only be treated as an exempt 
person to the extent of transactions conducted through its exemptible 
accounts. FinCEN believes that this change will help clarify the 
limitation on exemption for non-listed businesses.
    The Interim Rule further modifies the language of 31 CFR 
103.22(d)(2)(vi) to refer to the definition of a transaction account 
that is set forth at 31 CFR 103.22(d)(6)(ix). FinCEN believes that a 
cross-reference here would be helpful because of the change in the 
heading to paragraph (d)(6)(ix) that is described below.

B. 103.22(d)(2)(vii)--Payroll Customers

    The Interim Rule amends the language of 31 CFR 103.22(d)(2)(vii) 
regarding withdrawals for payroll purposes to refer to withdrawals from 
exemptible accounts. The Interim Rule further modifies the language of 
31 CFR 103.22(d)(2)(vii) to refer to the definition of a transaction 
account that is set forth at 31 CFR 103.22(d)(6)(ix). FinCEN believes 
that a cross-reference here would be helpful because of the change in 
the heading to paragraph (d)(6)(ix) that is described below.

C. 103.22(d)(3)(i)--Initial Designation of Exempt Persons

    The Interim Rule amends the language of 31 CFR 103.22(d)(3)(i) to 
refer to the use of Treasury Form TD F 90-22.53 when filing the initial 
designation of exempt person. \12\
---------------------------------------------------------------------------

    \12\ A bank is not required to file a form with respect to the 
transfer of currency to or from any of the twelve Federal Reserve 
Banks.
---------------------------------------------------------------------------

D. 103.22(d)(5)(ii)--Renewal of Designations for Non-listed Businesses 
and Payroll Customers

    The Interim Rule amends the language of 31 CFR 103.22(d)(5)(ii) to 
refer to the use of Treasury Form TD F 90-22.53 when filing the 
biennial renewal of designation of exempt persons regarding customers 
who are non-listed businesses or payroll customers.

E. 103.22(d)(6)(v)--Aggregated Accounts

    The Interim Rule modifies the language of 31 CFR 103.22(d)(6)(v) to 
state that a bank may aggregate all exemptible accounts (rather than 
simply transaction accounts) of a non-listed business or payroll 
customer to apply the terms of the exemption procedures to such a 
customer. Thus, for example, the determination whether a non-listed 
business ``frequently engages in transactions in currency with the bank 
in excess of $10,000'' (see 31 CFR 103.22(d)(2)(vi)(B)) is to be made 
by aggregating transactions in transaction and money market deposit 
accounts.

F. 103.22(d)(6)(ix)--Exemptible Accounts

    The Interim Rule modifies the language of 31 CFR 103.22(d)(6)(ix) 
to state that the exemptible accounts of a non-listed business or 
payroll customer include both transaction accounts and money market 
deposit accounts. (The heading for paragraph (d)(6)(ix) correspondingly 
has been changed from ``Transaction account'' to ``Exemptible

[[Page 46360]]

accounts of a non-listed business or payroll customer''.) The term 
``money market deposit account,'' for purposes of paragraph (d), is 
defined by reference to the definition of that term contained in 12 CFR 
204.2(d)(2). Currently, section 204.2(d)(2) defines a money market 
deposit account as any interest-bearing account on which the account 
holder is authorized to make no more than six transfers per calendar 
month or similar period for the purpose of making payments or transfers 
to another account of the depositor at the same institution or to a 
third person by means of a preauthorized, automatic, or telephonic 
order or instruction; of those six authorized transfers, no more than 
three may be made by check or similar order to a third person. The term 
``transaction account,'' for purposes of paragraph (d), continues to be 
defined by reference to section 19(b)(1)(C) of the Federal Reserve Act, 
12 U.S.C. 461(b)(1)(C), and that statute's implementing regulations, 
found at 12 CFR 204 et seq.

IV. Regulatory Matters

A. Executive Order 12866

    The Department of the Treasury has determined that this interim 
rule is not a significant regulatory action under Executive Order 
12866.

B. Unfunded Mandates Act of 1995 Statement

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

C. Administrative Procedure Act

    The Interim Rule grants significant relief from existing regulatory 
requirements. Thus, the Interim Rule may be made effective without the 
need to abide by the notice and comment procedures contained in 5 
U.S.C. 553(b), and, further, may be made effective before 30 days have 
passed after its publication date. See 5 U.S.C. 553(d).

D. Regulatory Flexibility Act

    The provisions of the Regulatory Flexibility Act relating to an 
initial and final regulatory analysis (5 U.S.C. 604) are not applicable 
to the Interim Rule contained in this document because FinCEN was not 
required to publish a notice of proposed rulemaking under 5 U.S.C. 553 
or any other law.

E. Paperwork Reduction Act

    The Interim Rule is being issued without prior notice and public 
procedure pursuant to 5 U.S.C. 553. By expanding the applicable 
exemptions from an information collection that has been reviewed and 
approved by the Office of Management and Budget (OMB) under control 
number 1506-0004, relating to the Currency Transaction Report, the 
Interim Rule contained in this document significantly reduces the 
existing burden of information collection under 31 CFR 103.22. Thus, 
the Paperwork Reduction Act does not require FinCEN to follow any 
particular procedures in connection with the promulgation of the 
Interim Rule.

List of Subjects in 31 CFR Part 103

    Administrative practice and procedure, Authority delegations 
(Government agencies), Banks and banking, Currency, Foreign banking, 
Foreign currencies, Gambling, Investigations, Law enforcement, 
Penalties, Reporting and recordkeeping requirements, Securities, Taxes.

Amendment

    For the reasons set forth above in the preamble, 31 CFR Part 103 is 
amended as follows:

PART 103--FINANCIAL RECORDKEEPING AND REPORTING OF CURRENCY AND 
FOREIGN TRANSACTIONS

    1. The authority citation for part 103 continues to read as 
follows:

    Authority: 12 U.S.C. 1829b and 1951-1959; 31 U.S.C. 5311-5330.


    2. Section 103.22 is amended by--
    a. Revising the introductory text of paragraph (d)(2)(vi),
    b. Revising paragraph (d)(2)(vi)(A),
    c. Revising the introductory text of paragraph (d)(2)(vii),
    d. Revising paragraph (d)(2)(vii)(A),
    e. Removing the second sentence of paragraph (d)(3)(i) and adding 
two new sentences in its place,
    f. Revising the first sentence of paragraph (d)(5)(ii),
    g. Revising paragraph (d)(6)(v), and
    h. Revising paragraph (d)(6)(ix).
    The revisions and additions read as follows:


Sec. 103.22  Reports of transactions in currency.

* * * * *
    (d) Transactions of exempt persons * * *
    (2) Exempt person. * * *
    (vi) To the extent of its domestic operations and only with respect 
to transactions conducted through its exemptible accounts, any other 
commercial enterprise (for purposes of this paragraph (d), a ``non-
listed business''), other than an enterprise specified in paragraph 
(d)(6)(viii) of this section, that:
    (A) Has maintained a transaction account, as defined in paragraph 
(d)(6)(ix) of this section, at the bank for at least 12 months;
* * * * *
    (vii) With respect solely to withdrawals for payroll purposes from 
existing exemptible accounts, any other person (for purposes of this 
paragraph (d), a ``payroll customer'') that:
    (A) Has maintained a transaction account, as defined in paragraph 
(d)(6)(ix) of this section, at the bank for at least 12 months;
* * * * *
    (3) Initial designation of exempt persons--(i) General. * * * 
Except as provided in paragraph (d)(3)(ii) of this section, designation 
by a bank of an exempt person shall be made by a single filing of 
Treasury Form TD F 90-22.53. (A bank is not required to file a Treasury 
Form TD F 90-22.53 with respect to the transfer of currency to or from 
any of the twelve Federal Reserve Banks.) * * *
* * * * *
    (5) Biennial filing with respect to certain exempt persons * * *
    (ii) Non-listed businesses and payroll customers. The designation 
of a non-listed business or a payroll customer as an exempt person must 
be renewed biennially, beginning on March 15 of the second calendar 
year following the year in which the first designation of such customer 
as an exempt person is made, and every other March 15 thereafter, on 
Treasury Form TD F 90-22.53. * * *
    (6) Operating rules * * *
    (v) Aggregated accounts. In determining the qualification of a 
customer as a non-listed business or a payroll customer, a bank may 
treat all exemptible accounts of the customer as a single account. If a 
bank elects to treat

[[Page 46361]]

all exemptible accounts of a customer as a single account, the bank 
must continue to treat such accounts consistently as a single account 
for purposes of determining the qualification of the customer as a non-
listed business or payroll customer.
* * * * *
    (ix) Exemptible accounts of a non-listed business or payroll 
customer. The exemptible accounts of a non-listed business or payroll 
customer include transaction accounts and money market deposit 
accounts. However, money market deposit accounts maintained other than 
in connection with a commercial enterprise are not exemptible accounts. 
A transaction account, for purposes of this paragraph (d), is any 
account described in section 19(b)(1)(C) of the Federal Reserve Act, 12 
U.S.C. 461(b)(1)(C), and its implementing regulations (12 CFR part 
204). A money market deposit account, for purposes of this paragraph 
(d), is any interest-bearing account that is described as a money 
market deposit account in 12 CFR 204.2(d)(2).
* * * * *

    Dated: July 14, 2000.
James F. Sloan,
Director, Financial Crimes Enforcement Network.
[FR Doc. 00-18770 Filed 7-27-00; 8:45 am]
BILLING CODE 4820-03-P




Last Updated 03/06/2008 communications@fdic.gov