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Federal R eserve Bank
OF DALLAS
W ILLIA M H . W ALLACE

DALLAS, TEXAS 75222

f i r s t v ic e p r e s id e n t
AND CH IE F O PER ATING O FFIC ER

March 19, 1987
Circular 87-21

TO:

The Chief Executive Officer of all
state member banks, bank holding
companies, and others concerned in
the Eleventh Federal Reserve District
SUBJECT

Procedures for Monitoring Bank Secrecy Act Compliance and Slip Sheet
with Amendments to Regulation H — Membership of State Banking Institutions in
the Federal Reserve System
DETAILS
The Board of Governors of the Federal Reserve System has adopted an
amendment to Regulation H to assure that regulated institutions establish and
maintain procedures to comply with the requirements of the Bank Secrecy Act.
These procedures must be established and implemented on or before April 27,
1987.
The slip sheet to Regulation H has been revised to incorporate the
new amendment. The new slip sheet should be inserted in Volume 2 of your
Regulations Binders.
ENCLOSURES
The material as published in the Federal Register and a slip-sheet to
Regulation H are enclosed.
MORE INFORMATION
For more information, please contact David W. Dixon of this Bank's
Legal Department at (214) 651-6228.
Sincerely yours,

For additional copies of any circular please contact the Public Affairs Department at (214) 651-6289. Banks and others are
encouraged to use the following incoming WATS numbers in contacting this Bank (800) 442-7140 (intrastate) and (800)
527-9200 (interstate).

This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)

2858

Federal Register / Vol. 52, No. 17 / Tuesday, January 27, 1987 / Rules and Regulations

DEPARTMENT OF THE TREASURY
Comptroller of the Currency
12CFR Part 21
[Docket No. 87-2]

FEDERAL RESERVE SYSTEM
12 CFR Part 208
[Docket No. R-0594]

FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Part 326
FEDERAL HOME LOAN BANK BOARD
12 CFR Part 563
[Docket No. 87-1]

NATIONAL CREDIT UNION
ADMINISTRATION
12 CFR Part 748
Procedures for Monitoring Bank
Secrecy Act Compliance
Office of the Comptroller of
the Currency, Treasury; Board of
Governors of the Federal Reserve
System; Federal Deposit Insurance
Corporation; Federal Home Loan Bank
Board; and National Credit Union
Administration.
a c t i o n : Final rule.
AGENCIES:

SUMMARY: The

Office of the Comptroller
of the Currency, Board of Governors of
the Federal Reserve System, Federal
Deposit Insurance Corporation, Federal
Home Loan Bank Board, and National
Credit Union Administration
(collectively referred to as the
“agencies”) are amending their
respective regulations to require the
financial institutions that they regulate
(“regulated institutions”) to establish
and maintain procedures to assure and
monitor compliance with the
requirements of subchapter II of chapter
53 of Title 31, United States Code. In its
original form, subchapter II w as part of
Pub. L. 91-508 which requires
recordkeeping for and reporting of
currency transactions by banks and
others and is commonly known as the
“Bank Secrecy A ct/’ This action is
necessary for the agencies to comply
with the requirements of section 1359 of
the Anti-Drug Abuse Act of 1986, Pub. L.
99-570. This final rule is effective on
January 27,1987, and is intended to
assure that regulated institutions
establish and maintain procedures to
comply with the requirements of the

Bank Secrecy Act. Because the agencies
are acting under a three-month statutory
deadline, this final rule establishes only
those requirements that we consider to
be the: minimum necessary for any
compliance procedure. The agencies,
however, are considering whether to
establish more detailed compliance
procedures in the near future.
DATE: This final rule is effective January
27,1987.
ADDRESSES: Office of the Comptroller of
the Currency, 490 L’Enfant Plaza East,
SW., Washington, DC 20219.
Board of Governors of the Federal
Reserve System, 20th Street and
Constitution Avenue NW., Washington,
DC 20551.
Federal Deposit Insurance
Corporation, 55017th Street, NW.,
Washington, DC 20429.
Federal Home Loan Bank Board, 1700
G Street, NW., Washington, DC 20552.
National Credit Union Administration,
1776 G Street, NW., Washington, DC
20456.
FOR FURTHER INFORMATION CONTACT:

Thomas C. Lehmkuhl, National Bank
Examiner, Commercial Activities
Division, (202) 447-1164 or Yvonne D.
Mclntire, Attorney, Legislative and
Regulatory Analysis Division, (202) 447­
1177, Office of the Comptroller of the
Currency.
Sara A. Kelsey, Senior Attorney Legal
Division, (202) 452-3236, Conrad G.
Bahlke, Attorney, Legal Division, (202)
452-3707, or Richard Schriber, Senior
Financial Analyst, (202) 452-2733,
Division of Bank Supervision and
Regulation, Board of Governors of the
Federal Reserve System.
R. Eugene Seitz, Review Examiner,
Division of Bank Supervision, (202) 898­
6793 or Katharine H. Haygood, Senior
Attorney, Legal Division (202) 898-3732,
Federal Deposit Insurance Corporation.
John Downing, Attorney, Office of
Enforcement, (202) 653-2604, C. Dawn
Causey, Attorney, Office of
Enforcement, (202) 653-2624, or Francis
Raue, Policy Analyst, Office of
Regulatory Policy, Oversight, and
Supervision, (202) 778-2517, Federal
Home Loan Bank Board.
Martin Kushner, Examiner, Office of
Examination and Insurance, (202) 357­
1065 or John K. Ianno, Staff Attorney,
Litigation Division, (202) 357-1030,
National Credit Union Administration.
SUPPLEMENTARY INFORMATION:

Background
Section 1359 of the Anti-Drug Abuse
Act of 1986 (“Act”), contains a number
of provisions amending section 8 of the
Federal Deposit Insurance Act (12 U.S.C.
1818), section 5(d) of the Home Owners*

Loan Act of 1933 (12 U.S.C. 1464(d)),
section 407 of the National Housing Act
(12 U.S.C. 173Q) and section 206 of the
Federal Credit Union Act (12 U.S.C.
1786). Specifically, these provisions
require the agencies to: (1) Prescribe
regulations requiring regulated
institutions to establish and maintain
procedures reasonably designed to
assure and monitor compliance with the
Bank Secrecy Act; and (2) review such
procedures during the course of their
examinations. The regulations requiring
regulated institutions to establish
procedures are to take effect within
three months after enactment—by
January 27,1987. The Act also
authorizes the agencies to issue civil
money penalties and cease and desist
orders in the event that a regulated
institution fails to establish such
procedures or to correct problems with
regard to its procedures after an agency
has notified the institution that problems
exist.
Agency Action
The agencies are issuing this final rule
to require regulated institutions to
establish and maintain a program
designed to assure and monitor
compliance with the requirements of the
Bank Secrecy Act and the implementing
regulations promulgated thereunder by
the Department of the Treasury
established at 31 CFR Part 103. An
institution’s compliance program must,
a t a minimum, consist of a system of
internal controls to assure ongoing
compliance and provide for.independent
testing of compliance by the institution’s
personnel or by an outside party. The
institution shall also designate an
individual or individuals responsible for
coordinating and monitoring day-to-day
compliance and provide training for
appropriate personnel.
This final rule becomes effective on
January 27,1987. Institutions must have
developed and implemented their
compliance programs by April 27,1987.
The Department of the Treasury has
advised the agencies that institutions
should recognize that compliance with
the requirements of this rule, standing
alone, will not be considered to be a
defense in any criminal prosecution or
civil action involving a violation of the
Bank Secrecy Act or regulations
promulgated thereunder..

Boartd of Governors of the Federal Reserve System

Amendment to Regulation H
Membership of State Banking Institutions
in the Federal Reserve System
February 1987*

Effective May 15, 1985, section 208.13 is add­
ed to read as follows:

SECTION 208.13—Capital Adequacy
The standards and guidelines by which the
capital adequacy of state member banks will
be evaluated by the Board are set forth in ap­
pendix A to the Board’s Regulation Y, 12
CFR 225.

Effective January 27, 1987, section 208.14 is
added to read as follows:

SECTION 208.14— Procedures for
Monitoring Bank Secrecy Act
Compliance
(a) Purpose. This section is issued to ensure
that all state member banks establish and
maintain procedures reasonably designed to
ensure and monitor their compliance with the
provisions of subchapter II of chapter 53 of
title 31, United States Code, the Bank Secrecy
Act, and the implementing regulations
promulgated thereunder by the Department
of Treasury at 31 CFR part 103, requiring
recordkeeping and reporting of currency
transactions.13

(b) Establishment o f compliance program.
On or before April 27, 1987, each bank shall
develop and provide for the continued admin­
istration of a program reasonably designed to
ensure and monitor compliance with the rec­
ordkeeping and reporting requirements set
forth in subchapter II of chapter 53 of title 31,
United States Code, the Bank Secrecy Act,
and the implementing regulations promulgat­
ed thereunder by the Department of Treasury
at 31 CFR part 103. The compliance program
shall be reduced to writing, approved by the
board of directors, and noted in the minutes.
(c) Contents o f compliance program. The
compliance program shall, at a minimum—
(1) provide for a system of internal con­
trols to ensure ongoing compliance;
(2) provide for independent testing for
compliance to be conducted by bank per­
sonnel or by an outside party;
(3) designate an individual or individuals
responsible for coordinating and monitor­
ing day-to-day compliance, and
(4) provide
personnel.

training

for

appropriate

13 Recordkeeping requirements contained in this section
have been approved by the Board under delegated authori­
ty from the Office of Management and Budget under the
provisions of chapter 35 of title 44, United States Code, and
have been assigned OMB No. 7100-0196.
* The complete regulation, as amended effective January
27, 1987, consists of—
* the regulation pamphlet dated May 1982 (see inside
cover) and
* this slip sheet.

1


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102