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Federal R eserve Bank
OF DALLAS
TON Y

J . S A L V A G G IO

D ALLAS , TEX AS

FIR S T V IC E P R ES ID EN T

September 1, 1995

75265-5906

Notice 95-86

TO:

The Chief Operating Officer of
each financial institution in the
Eleventh Federal Reserve District

SUBJECT
Proposed Amendments to the
Bank Secrecy Act; Delay of Final Rule
DETAILS
In accordance with the Bank Secrecy Act, the Board of Governors of the
Federal Reserve System and the Department of the Treasury are requesting comment on
proposed amendments to their rule that requires enhanced recordkeeping related to
certain wire transfers by financial institutions.
The proposed amendments would conform the meaning of the definitions of
the parties to an international funds transfer in the rule to their meanings under Article
4A of the Uniform Commercial Code. These changes should facilitate compliance with
the Bank Secrecy Act rules.
Each comment should be sent separately to both the Treasury and the Board.
Comments must be received by September 25, 1995. At the Board, please address com­
ments to William W. Wiles, Secretary, Board of Governors of the Federal Reserve
System, 20th Street and Constitution Avenue, N.W., Washington, D.C. 20551. All
comments should refer to Docket No. R-0888. At the Treasury, please send comments
to the Office of Regulatory Policy and Enforcement, Financial Crimes Enforcement
Network, Department of the Treasury, 2070 Chain Bridge Road, Vienna, VA 22182,
Attention: Funds Transfer NPRM.
The Board and the Treasury have also deferred the effective date of the
recordkeeping rule from January 1, 1996, to April 1, 1996.

For additional copies, bankers and others are encouraged to use one of the following toll-free numbers in contacting the Federal
Reserve Bank of Dallas: Dallas Office (800) 333 -4460; El Paso Branch Intrastate (800) 592-1631, Interstate (800) 351-1012; Houston
Branch Intrasiale (800) 392-4162, Interstate (800) 221-0363; San Antonio Branch Intrastate (800) 292-5810.

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

- 2 -

ATTACHMENTS
Copies of the Board’s and the Treasury’s notices as they appear on pages
44143-54, Vol. 60, No. 164, of the Federal Register dated August 24, 1995 is attached.

MORE INFORMATION
For more information, please contact James Dean at (214) 922-6237. For
additional copies of this Bank’s notice, please contact the Public Affairs Department at
(214) 922-5254.
Sincerely,

Thursday
August 24, 1995

Part IV
FederaJ Reserve System
Department of the Treasury
31 CFR Part 103
Bank Secrecy Act Regulations; Final Rule
and Proposed Rule

Federal Reserve System
12 CFR Part 219
Reimbursement for Providing Financial
Records; Recordkeeping Requirements
for Certain Financial Records; Final Rule

Department of the Treasury
31 CFR Part 103
Bank Secrecy Act Regulations; Final Rule
and Proposed Rule

44144

Federal Register / Vol. 60, No. 164 / Thursday, August 24, 1995 / Rules and Regulations

FEDERAL RESERVE SYSTEM

is delayed for three months from
January 1,1 9 9 6 to April 1,1996.

[Docket No. R-0807]

DEPARTMENT OF THE TREASURY

In concurrence:
By the Board of Governors of the Federal
Reserve System, August 17,1995.

31 CFR Part 103

W illiam W. Wiles,
Secretary to the Board.

RIN 1506-AA16

By the Department of the Treasury,
Dated: July 31,1995.

Amendment to the Bank Secrecy Act
Regulations Relating to Recordkeeping
for Funds Transfers and Transmittals
of Funds by Financial Institutions

Stanley E. Morris,
Director, Financial Crimes Enforcement
Network.

AGENCY: Board of Governors of the

BILUNG CODES: #210-01-f>, 4B2<W>3-P

FR Doc 95-20841 Filed 0 8 -1 3 -9 5 ; 8:45 a.m.

3625; or Elaine Boutilier, Senior
Counsel 202/452-2418, Legal Division,
Board of Governors of the Federal
Reserve System. For the hearing
impaired only, Telecommunication
Device for the Deaf (TDD), Dorothea
Thompson, 202/452-3544.
The effective date of the final rule
published by the Board at 60 FR 231,
January 3 ,1 9 9 5 , is delayed for three
months from January 1 ,1 996, to April
1,1996.
By the Board of Governors of the Federal
Reserve System, August 17,1995.

William W. Wiles,

Federal Reserve System; Department of
the Treasury.
ACTION: Joint final rule; delay of
effective date.

FEDERAL RESERVE SYSTEM

SUMMARY: On January 3,1995, the

[Regulation S; Docket No. R-0807]

Financial Crimes Enforcement Network
(FinCEN) of the Department of the
Treasury (Treasury) and the Board of
Governors of the Federal Reserve
System (Board) jointly published a final
rule that requires enhanced
recordkeeping related to certain funds
transfers and transmittals of funds by
financial institutions, effective January
1 ,1 996. (60 FR 220). The Treasury and
the Board have delayed the effective
date of the joint final rule until April 1,
1996, because of the uncertainty by
financial institutions as to their
responsibilities under the joint final rule
with respect to international transfers
pending final action on proposed
amendments to the rule, which are
published elsewhere in today’s Federal
Register.
EFFECTIVE OATES: Effective August 24,
1995, the effective date of the joint final
rule published on January 3 ,1 9 9 5 , at 60
FR 220, is delayed until April 1,1996.
FOR FURTHER INFORMATION CONTACT:

Treasury: Roger Weiner, Assistant
Director, 202/622-0400; Stephen R.
Kroll, Legal Counsel, 703/905-3534; or
Nina A. Nichols, Attomey-Advisor, 703/
905-3598, FinCEN.
B oard: Louise L. Roseman, Associate
Director, 202/452-2789; Gayle Brett,
Manager, Fedwire Section, 202/4522934; Division of Reserve Bank
Operations and Payment Systems;
Oliver Ireland, Associate General
Counsel, 202/452-3625; or Elaine
Boutilier, Senior Counsel 202/452-2418,
Legal Division, Board of Governors of
the Federal Reserve System. For the
hearing impaired only,
Telecommunication Device for the Deaf
(TDD), Dorothea Thompson, 202/4523544.
The effective date of the joint final
rule published by the Board and
Treasury at 60 FR 220, January 3, 1995,

12 CFR Part 219

Reimbursement for Providing Financial
Records; Recordkeeping
Requirements for Certain Financial
Records
AGENCY: Board of Governors of the

Secretary to the Board.
[FR Doc. 95-20843 Filed 8 -2 3 -9 5 ; 8:45 am]
BILUNG CODE 8210-01-P

DEPARTMENT OF THE TREASURY
31 CFR Part 103
RIN 1506-AA17

Federal Reserve System.
ACTION: Final rule; delay of effective
date.

Amendment to the Bank Secrecy Act
Regulations Relating to Orders for
Transmittals of Funds by Financial
Institutions

SUMMARY: On January 3 ,1 9 9 5 , the Board

AGENCY: Financial Crimes Enforcement

of Governors of the Federal Reserve
System (Board) published a final rule
that established Subpart B of Regulation
S (60 FR 231), which cross-references
the substantive provisions of a joint rule
adopted by the Board and the
Department of the Treasury on the same
day. The joint rule requires enhanced
recordkeeping related to certain funds
transfers and transmittals of funds by
financial institutions. The Board and the
Department of the Treasury have
delayed the effective date of the joint
final rule until April 1 ,1 9 9 6 , because of
the uncertainty by financial institutions
as to their responsibilities under the
joint final rule with respect to
international transfers pending final
action on proposed amendments to the
rule, which are published elsewhere in
today’s Federal Register. Because
Subpart B of Regulation S relies on the
joint final rule for its substantive
provisions, its effective date is also
delayed until April 1,1996.
EFFECTIVE DATES: Effective August 24,
1995, the effective date of the final rule
published on January 3 ,1 9 9 5 , at 60 FR
231, is delayed until April 1,1996.
FOR FURTHER INFORMATION CONTACT:

Louise L. Roseman, Associate Director,
202/452-2789; Gayle Brett, Manager,
Fedwire Section, 202/452-2934;
Division of Reserve Bank Operations
and Payment Systems; Oliver Ireland,
Associate General Counsel, 2 0 2 /4 5 2 -

Network, Treasury.
ACTION: Final rule; delay of effective
date.
SUMMARY: In January 1995, the

Department of the Treasury (Treasury),
through its Financial Crimes
Enforcement Network (FinCEN),
adopted a final rule (60 FR 234, January
3.1995) requiring financial institutions
that transmit funds to include in
transmittal orders certain information
(the travel rule). On the same date,
Treasury, through FinCEN, and the
Board of Governors of the Federal
Reserve System (the Board) jointly
adopted a final rule (60 FR 220, January
3 .1995) requiring financial institutions
to obtain and retain certain information
about parties to transmittals of funds
(the joint rule). In response to requests
from the banking industry, Treasury and
the Board have issued proposed
amendments to the joint rule, and
Treasury has proposed conforming
amendments to the travel rule (see
documents published elsewhere in
today’s Federal Register). In order to
provide financial institutions subject to
the rules sufficient time to adapt their
funds transmittal systems to comply
with the rules as they are proposed to
be amended, the effective date of the
travel rule is hereby delayed from
January 1 ,1 9 9 6 to April 1 ,1 9 9 6 . The
effective date of the joint rule has also

Federal Register / Vol. 60, No. 164 / Thursday, August 24, 1995 / Rules and Regulations
been delayed from January 1,1 9 9 6 to
April 1,1 9 9 6 (see document published
elsewhere in today’s Federal Register).
EFFECTIVE DATES: Effective August 24,
1995, this document delays the effective
date of the final rule published at 60 FR
234, January 3, 1995, until April 1,
1996.
FOR FURTHER INFORMATION CONTACT:

Roger Weiner, Assistant Director, Office
of Compliance and Enforcement, 202/
622-0400; Nina A. Nichols, AttomeyAdvisor, Office of Legal Counsel, 703/
905-3598.
The effective date of the final rule
issued by Treasury and published at 60
FR 234, January 3 ,1 9 9 5 , is delayed for
three months, from January 1,1996 to
April 1,1996.
Dated: July 31,1995.

Stanley E. M orris,
Director, Financial Crimes Enforcement
Network.
[FR Doc. 95-20844 Filed 8 -2 3 -9 5 ; 8:45 am]
BILUNG CODE 4820-03-P

44145

44146

Federal Register / Vol. 60, No. 164 / Thursday, August 24, 1995 / Proposed Rules

FEDERAL RESERVE SYSTEM
[Docket No. R-0888]

DEPARTMENT OF THE TREASURY
31 CFR Part 103
RIN 1506-AA16

Amendment to the Bank Secrecy Act
Regulations Relating to Recordkeeping
for Funds Transfers and Transmittals
of Funds by Banks and Other Financial
Institutions
AGENCY: Department of the Treasury;

Board of Governors of the Federal
Reserve System.
ACTION: Joint proposed rule.
SUMMARY: In January 1995, the Financial

Crimes Enforcement Network (FinCEN)
of the Department of the Treasury
(Treasury) and the Board of Governors
of the Federal Reserve System (Board)
jointly published a final rule that
requires enhanced recordkeeping
related to certain funds transfers and
transmittals of funds by financial
institutions (the joint rule). Also in
January 1995, the Treasury adopted a
companion rule, known as the travel
rule, that requires financial institutions
to include in transmittal orders certain
information that must be maintained
under the joint rule. The joint rule sets
forth definitions of terms used in both
rules. The original effective date of these
rules was January 1, 1996. Subsequent
to adoption of these rules, several banks
have expressed concerns to the Treasury
and the Board that compliance with the
joint rule and the travel rule would be
complicated if the parties to an
international transfer were defined
differently in the Bank Secrecy Act
regulations than they are defined in the
Uniform Commercial Code Article 4A.
The Treasury and the Board have
proposed amendments to the joint rule’s
definitions and technical conforming
changes to the substantive provisions of
the joint rule to conform the meanings
of the definitions of the parties to an
international transfer to their meanings
under Article 4A of the Uniform
Commercial Code. These proposed
amendments are intended to reduce
confusion of banks and nonbank
financial institutions as to the
applicability of the joint rule and the
travel rule and to reduce the cost of
complying with the rules’ requirements.
The Treasury and the Board believe that
the proposed amendments will not have
a material adverse effect on the rules’
usefulness in law enforcement
investigations and proceedings. The
proposed amendments should not affect

a bank’s responsibilities under the rules
with respect to domestic funds transfers.
Due to the uncertainties resulting from
these proposed amendments, the
Treasury and the Board have delayed
the effective date of the joint rule; a
document delaying the effective date of
the final joint rule until April 1,1996,
is published elsewhere in today’s
Federal Register.
DATES: Comments must be submitted on

or before September 25,1995.
ADDRESSES: Each comment should be

sent separately to both the Treasury and
the Board at the following addresses:
Treasury: Office of Regulatory Policy
and Enforcement, Financial Crimes
Enforcement Network, Department of
the Treasury, 2070 Chain Bridge Road,
Vienna, VA 22182, Attention: Funds
Transfer NPRM. Comments may be
inspected between 10:00 a.m. and 4:00
p.m. at the Treasury Library, located in
room 5030,1500 Pennsylvania Avenue,
N.W., Washington, D.C. Persons wishing
to inspect the comments submitted
should request an appointment at the
Treasury Library, 202/622-0990.
B oard: Comments, which should refer
to Docket No. R -0888, may be mailed to
Mr. William W. Wiles, Secretary, Board
of Governors of the Federal Reserve
System, 20th Street and Constitution
Avenue, N.W., Washington, D.C. 20551.
Comments also may be delivered to
Room B -2222 of the Eccles building
between 8:45 a.m. and 5:15 p.m.
weekdays, or to the guard station in the
Eccles Building courtyard on 20th Street
N.W. (between Constitution Avenue and
C Street) at any time. Comments may be
inspected in Room M P-500 of the
Martin Building between 9:00 a.m. and
5:00 p.m. weekdays, except as provided
in 12 CFR 261.8 of the Board’s Rules
Regarding Availability of Information.
FOR FURTHER INFORMATION CONTACT:

Treasury: Roger Weiner, Assistant
Director, 202/622-0400; Stephen R.
Kroll, Legal Counsel, 703/905-3534; or
Nina A. Nichols, Attomey-Advisor, 703/
905-3598, FinCEN.
B oard: Louise L. Roseman, Associate
Director, 202/452-2789; Gayle Brett,
Manager, Fedwire Section, 2 02/4522934; Division of Reserve Bank
Operations and Payment Systems;
Oliver Ireland, Associate General
Counsel, 202/452-3625; or Elaine
Boutilier, Senior Counsel, 2 02/4522418, Legal Division, Board of
Governors of the Federal Reserve
System. For the hearing impaired only,
Telecommunication Device for the Deaf
(TDD), Dorothea Thompson, 202/452—
3544.

SUPPLEMENTARY INFORMATION:

I. Background
The statute generally referred to as the
Bank Secrecy Act (BSA) (Pub. L. 9 1 508, codified at 12 U.S.C. 1829b and
1951-1959, and 31 U.S.C. 5311-5330)
authorizes the Secretary of the Treasury
to require financial institutions to keep
records and file.reports that the
Secretary determines have a high degree
of usefulness in criminal, tax, or
regulatory investigations or proceedings.
The authority of the Secretary to
administer the BSA has been delegated
to the Director of FinCEN. The BSA was
amended by the Annunzio-Wylie AntiMoney Laundering Act of 1992 (Pub. L.
102-550), which authorizes the
Treasury and the Board to prescribe
regulations to require maintenance of
records regarding domestic and
international funds transfers. The
Treasury and the Board are required to
promulgate jointly, after consultation
with state banking supervisors,
recordkeeping requirements for
international funds transfers by
depository institutions and nonbank
financial institutions. The Treasury and
the Board are required to consider the
usefulness of recordkeeping rules for
international funds transfers in
criminal, tax, or regulatory
investigations or proceedings and the
effect of such rules on the cost and
efficiency of the payments system. The
Treasury and the Board are authorized
to promulgate regulations for domestic
funds transfers by depository
institutions. The Treasury, but not the
Board, is authorized to promulgate
recordkeeping and reporting
requirements for domestic funds
transfers by nonbank financial
institutions.
In January 1995, the Treasury and the
Board jointly published enhanced
recordkeeping requirements related to
certain funds transfers and transmittals
of funds by banks and other financial
institutions, in accordance with the BSA
(60 FR 220, January 3, 1995). At the
same time, the Treasury adopted a
companion rule, known as the travel
rule, that requires financial institutions
to include in transmittal orders certain
information that must be retained under
the joint rule (60 FR 234, January 3,
1995). The joint rule sets forth
definitions of terms used in both rules.
These rules were scheduled to become
effective on January 1 ,1 996.
II. Industry Concerns Regarding
Definition of Parties to an International
Funds Transfer
Subsequent to adoption of these rules,
several large banks as well as bank

Federal Register / Vol. 60, No. 164 / Thursday, August 24, 1995 / Proposed Rules
counsel have advised the Treasury and
the Board that compliance with the joint
rule and the travel rule would be
complicated if the parties to an
international funds transfer were
defined differently in the joint rule than
they are in the Uniform Commercial
Code Article 4A (UCC 4A). Under the
joint rule adopted in January, the first
U.S. bank office that handles an
incoming international funds transfer is
defined as the originator’s bank.1 Under
UCC 4A and the Board’s Regulation J
governing Fedwire transfers (12 CFR
Part 210, subpart B), which incorporates
UCC 4A, if the U.S. bank receives a
payment order from a foreign bank and

executes a corresponding payment order
to a subsequent receiving bank, the first
U.S. bank would be deemed an
intermediary bank rather than the
originator’s bank. Large banks that
regularly process international funds
transfers believe that substantial
confusion would result from defining
the parties to an international funds
transfer for the purposes of the BSA
rules differently from the manner in
which they are defined under UCC 4A.
In addition to the confusion created
by defining the parties to an
international funds transfer in a manner
that is not consistent with the roles of
the parties as defined by UCC 4A,

German Company ........................................ ...........
German Bank 1 ........................................................
German Bank 2 ........................................................
New York Bank 1 .....................................................
New York Bank 2 .....................................................
California Bank .........................................................
Japanese Bank .........................................................
Japanese Company..................................................

In this transfer, a German company
instructs its bank (German Bank 1) to
send a dollar payment to Japanese Bank
for credit to a Japanese company.
German Bank 1 forwards the payment
instructions to its correspondent,
German Bank 2. German Bank 2 sends
the payment instructions via SWIFT to
its New York correspondent, New York
Bank 1. New York Bank 1 executes a
payment order via CHIPS to New York
Bank 2. New York Bank 2 forwards the
payment order via Fedwire to California
Bank. California Bank sends the
payment order via SWIFT to Japanese
Bank, which credits the account of the
Japanese company.

several banks have indicated that they
believe the difference between the BSA
and the UCC 4A definitions may cause
certain problems in the application of
the joint rule and the travel rule to
international funds transfers. The
following chart depicts a hypothetical
funds transfer that serves to illustrate
the operational issues raised by the
industry representatives if the first U.S.
bank in an incoming international funds
transfer were deemed to be the
originator’s bank and the last U.S. bank
in an outgoing international funds
transfer were deemed to be the
beneficiary’s bank:

Definitions of bank and FI parties to transfer limited
to US offices (rule published in January 1995)

Parties to transfer

44147

Originator/Transmittor ..............................................
Originator’s bank/Trans minor's FI ............................
Intermediary bank/intermediary’s FI .........................
Beneficiary’s bank/Recipient’s F I ..............................
Beneficiary/Recipient ...............................................

Definitions that conform to UCC
4A meanings (proposed amended
rule)
Originator/Transmittor.
Originator’s bank/Transmittor's FI.
Intermediary bank/lntermediary FI.
Intermediary bank/lntermediary FI.
Intermediary bank/lntermediary FI.
Intermediary bank/lntermediary FI.
Beneficiary’s bank/Recipient’s FI.
Beneficiary/Recipient.

Under the joint rule as adopted in
January, German Bank 2 is defined as
the originator (transmittor) of the
transfer, because it is the sender of the
first payment order 2 in a funds transfer
and New York Bank 1 is defined as the
originator’s bank (transmittor’s financial
institution). Japanese Bank 1, which is
neither a bank nor a financial institution
under the BSA definitions, is defined as

the beneficiary and California Bank is
defined as the beneficiary’s bank. In the
example, New York Bank 1 as
originator’s bank would be subject to the
following requirements under the joint
rule:
A. Obtain an d retain the n am e an d
ad d ress o f German B an k 2 (the
originator) (I03.33(e)(l)(i)j. New York
Bank 1 generally would have a record of
the name and address of German Bank
2, which in virtually all cases would be
an accountholder at New York Bank 1.
In the rare case in which German Bank
2 is not an established customer of New
York Bank 1, New York Bank 1 would
be required to obtain this information.
B. H ave the cap ab ility to retrieve the
record o f the fu n d s transfer b y n a m e or
accou nt n um ber o f German B an k 2
(103.33(e)(4)). All financial institutions
are currently subject to the general
retrievability requirements under
section 103.38(d), which states that all
records required to be retained under 31
CFR Part 103 “ . . . shall be filed or
stored in such a way as to be accessible
within a reasonable time, taking into
consideration the nature of the record,
and the amount of time expired since

the record was made.” While the
requirements of the joint rule emphasize
the need for an originator’s bank to have
the capability to retrieve funds transfer
records by name or account number of
the originator, the bank would
nonetheless have to have the capability
to retrieve these records if it were
deemed to be an intermediary bank.
C. C om ply with the verification
requirem ents i f German B an k 2 is not an
estab lish ed cu stom er (103.33(e)(2)). If
German Bank 2 were not an established
customer of New York Bank 1 (a
situation that would occur only rarely),
New York Bank 1 would have to comply
with the joint rule’s verification
requirements. This would require
manual intervention in what is
generally a highly automated process,
and the Treasury and the Board do not
believe that the resulting information
would be highly useful to law
enforcement.
In addition, under the travel rule, the
originator’s bank and each intermediary
bank (if the information is received from
the sender) would be required to:
D. In clu de the nam e, address, an d
accou n t n u m ber o f German B an k 2 in
the p aym en t ord er it ex ecu tes (103.33(g)

1
The originator’s bank is defined as “the
receiving bank to which the payment order of the
originator is issued if the originator is not a bank,
or the originator if the originator is a bank.”
(103.11(w)) A receiving bank is defined as "the
bank to which the sender’s instruction is
addressed.” (103.11(aa)) As the definition of bank

is limited to an “agent, agency, branch or office
within the United States” (103.11(c)), a receiving
bank must be a U.S. banking office, and therefore
the originator’s bank is the first U.S. banking office
to handle the transfer.
2 A payment order is defined as “an instruction
of a sender to a receiving b a n k .. . . ” (31 CFR

103.11(y)) As noted above, a receiving bank is
defined as “the bank to which the sender’s
instruction is addressed.” Because the BSA rules
limit the definition of bank to an office within the
United States, the instruction of a sender to the first
U.S. banking office is defined as the first payment
order.

III. Definitions Under Joint Rule as
Published in January 1995

44148

Federal Register / Vol. 60, No. 164 / Thursday, August 24, 1995 / Proposed Rules

(1) an d (2)). New York Bank 1 typically
would include in the payment order it
executes the SWIFT Bank Identification
Code (BIC) or CHIPS Universal
Identifier (UID) of German Bank 2 (the
originator), rather than German Bank 2’s
name, address, and account number.
The Treasury believes that use of a
widely-used industry code, such as a
BIC, UID, or routing number, to identify
the transmittor constitutes compliance
with the travel rule requirement to
include the name, address, and account
number of the transmittor in subsequent
payment orders.
Information pertaining to German
Bank 2 may not be retained in all
subsequent payment orders, however,
because German Bank 2 generally would
be identified as the instructing bank,
rather than the originator’s bank, in the
CHIPS message sent by New York Bank
1. While the identification of the bank
included in the originator’s bank field
generally is retained in subsequent
payment orders, the identification of the
bank in the instructing bank field may
change in subsequent payment orders.3
California Bank, as beneficiary’s bank,
would be required under the joint rule
to (1) retain the information contained
in the payment order sent by New York
Bank 2 (103.33(e)(l)(iii)); (2) have the
capability to retrieve the record of the
funds transfer by name or account
number of Japanese Bank (103.33(e)(4));
and (3) comply with the verification
requirements if Japanese Bank is not an
established customer (103.33(e)(3)).
IV. Effect of Proposed Amendment
If New York Bank 1 and California
Bank in the example above were
considered to be intermediary banks
instead of the originator’s bank and
beneficiary’s bank, respectively, under
the BSA rules, they would be required
under the joint rule to retain a copy of
the payment order they accept
(103.33(e)(l)(ii)). As noted above, while
there is no specific retrievability
requirement under the joint rule for
intermediary banks, under 103.38(d)
3 Banks often define the parties to an
international transfer in the SWIFT, CHIPS, and
Fedwire formats differently than the parties are
defined in the BSA rules as adopted in January.
These formats have fields for the identification of
the originator’s bank, the instructing bank, the
sender bank (the bank that sends the transfer
through SW IFT, CHIPS, or Fedwire), the receiver
bank, the intermediary bank, and the beneficiary’s
bank. The first U.S. or foreign bank in a transfer is
generally identified in the message format as the
originator’s bank; the bank that immediately
precedes the sender bank (if different than the
originator's bank) is identified as the instructing
bank. For transfers that are sent through a large
number of receiving banks, the identification of
instructing bank may change from payment order to
payment order.

expansion of the definitions of
beneficiary’s bank, originator’s bank,
payment order, receiving bank,
receiving financial institution,
recipient’s financial institution,
transmittal order, transmittor, and
transmittor’s financial institution to
include both domestic and foreign
institutions. The Treasury and the Board
have also proposed technical
conforming changes to the joint rule to
clarify that only bank and financial
institution offices located within the
United States are subject to the joint
rule’s requirements.
These amendments should reduce
confusion with respect to the
interpretation of the rules and should
facilitate compliance with the rules’
requirements. Moreover, the Treasury
and the Board do not believe that these
proposed amendments will increase the
cost of compliance with the rules’
requirements for those banks and
nonbank financial institutions that have
prepared to comply with the rules under
the assumption that the first U.S.
banking office in an international
transfer is subject to the originator’s
bank responsibilities.
In addition, the Treasury and the
Board have revised section 103.33(e)(6)
by deleting the word “domestic” prior
to the word “bank” and prior to the
words “broker or dealer in securities.”
These changes have no material effect
on the scope of the exclusions set forth
in this section as the word “bank” is
V. Corresponding Changes Affecting
defined to be limited to offices located
Nonbank Financial Institutions
within the United States and the term
The example reviewed above involves “broker or dealer in securities” is
limited to brokers registered with the
banks, as banks have raised concerns
Securities and Exchange Commission.4
with the differences between the
definitions of the parties to international VII. Paperwork Reduction Act
funds transfers in the joint rule and UCC
The collection of information required
4A. Financial institutions other than
by the joint final rule whose amendment
banks have not raised operational
is proposed in this notice was submitted
concerns with the Treasury and the
by the Treasury to the Office of
Board on this matter. The Treasury and
Management and Budget in accordance
the Board believe, however, that
with the requirements of the Paperwork
nonbank financial institutions that
Reduction Act (44 U.S.C. 3504(h)) under
conduct international transmittals of
control number 1505-0063. (See, 60 FR
funds may have similar compliance
227 (January 3, 1995)) The collection is
concerns. Accordingly, the proposed
authorized, as before, by 12 U.S.C.
amendments to the joint rule include
1829b and 1959 and 31 U.S.C. 53 1 1 modifications that correspond to the
5330.
changes that apply to banks.
The changes to the joint final rule
VI. Request for Comment
proposed in this document will
The Treasury and the Board request
eliminate information collection
comment on proposed amendments to
requirements that were required by the
the definitions that make the roles of the joint final rule. Therefore, no additional
parties to an international funds transfer Paperwork Reduction Act submissions
consistent under the BSA rules and
are required.
under UCC 4A and that make parallel
changes to the definitions of the parties
4 The Treasury has also proposed companion
to an international transmittal of funds.
amendments to the travel rule. See document
elsewhere in today’s Federal Register.
The proposed amendments include

information retained must be
“accessible.” Under the travel rule, New
York Bank 1 would be required to
include in its payment order to New
York Bank 2 only the information
pertaining to the transmittor and other
transfer information that it received
from German Bank 2 (103.33(g)(2)).
Similarly, New York Bank 2 and
California Bank, as other intermediary
banks in the funds transfer, would be
required to include this information in
the payment orders they execute if
received in the payment orders they
accepted.
Treatment of New York Bank 1 and
California Bank as intermediary banks
addresses the concerns of industry
representatives, Under current industry
practice, banks generally would be in
compliance with the recordkeeping,
retrievability, and travel rule
requirements for intermediary banks.
The Treasury and the Board do not
believe that identifying the banks in an
international transfer in the same
manner as they are defined in UCC 4A
will reduce the usefulness of the
information to law enforcement,
p ro v id ed that intermediary banks
comply with the requirements of
103.38(d). As part of the 36-month
review of the effectiveness of the joint
rule and the travel rule, Treasury will
monitor the experience of law
enforcement in obtaining from
intermediary banks information retained
pursuant to the joint rule.

Federal Register^/ Vol. 60, No. 164 / 'fhursday, August 24. JL995 / Proposed -RalesV m . Regulatory Flexibility Act
Pursuant to section 605(b) of the
Regulatory Flexibility Act (5 U.S.C.
605(b)), the Treasury and the Board
hereby certify that these proposed
amendments to the joint final rule will
not have a significant economic impact
on a substantial number of small
entities. The proposed amendments
eliminate uncertainty as to the
application of the joint final rule and
reduce the cost of complying with the
joint rule’s requirements. Furthermore,
the proposed amendments affect
international funds transfers and
transmittals of funds, which are handled
almost exclusively by large institutions.
Accordingly, a regulatory flexibility
analysis is not required.
IX. Executive Order 12866
The Treasury finds that these
proposed amendments to the joint rule
are not “significant” for purposes of
Executive Order 12866. The
modifications should reduce the cost of
compliance with the joint rule and the
travel rule. The Treasury believes that
these proposed rule changes will not
affect adversely in a material way the
economy, a sector of the economy,
productivity, competition, jobs, the
environment, public health or safety, or
State, local, or tribal governments or
communities. These proposed revisions
create no inconsistencies with, nor do
they interfere with actions taken or
planned by other agencies. Finally,
these proposed revisions raise no novel
legal or policy issues. A cost and benefit
analysis therefore is not required.
X. Unfunded Mandates Reform Act of
1995 Statement
Section 202 of the Unfunded
Mandates Reform Act of 1995, Public
Law 104— (Unfunded Mandates Act),
4
signed into law on 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. The Treasury has
determined that it is not required to
prepare a written budgetary impact
statement for the proposed
amendments, and has concluded that
the proposed amendments are the most
cost-effective and least burdensome
means of achieving the stated objectives
of the rule.
List of Subjects in 31 CFR Part 103
Administrative practice and
procedure, Banks, banking, Brokers,
Currency, Foreign banking, foreign

44149

recipient’s financial institution includes
a beneficiary’s bank, except where the
beneficiary is a recipient’s financial
institution.
Amendment
*
*
*
*
*
For the reasons set forth in the
(kk) Transm ittal order. The term
preamble, 31 CFR Part 103 is proposed
transmittal order includes a payment
to be amended as set forth below:
order and is an instruction of a sender
to a receiving financial institution,
PART 103—FINANCIAL
transmitted orally, electronically, or in
RECORDKEEPING AND REPORTING
writing, to pay, or cause another
OF CURRENCY AND FOREIGN
financial institution or foreign financial
TRANSACTIONS
agency to pay, a fixed or determinable
amount of money to a recipient if:
1. The authority citation for Part 103
*
*
*
*
*
is revised to read as follows:
(11) Transmittor. The sender of the
Authority: 12 U.S.C. 1829b and 1951-1959;
first transmittal order in a transmittal of
31 U.S.C. 5311-5330.
funds. The term transmittor includes an
2. Section 103.11 is amended by
originator, except where the
revising paragraphs (e), (w), (y)
transmittor’s financial institution is a
introductory text, (aa), (bb), (dd), (kk)
financial institution or foreign financial
introductory text, (11), and (mm) to read
agency other than a bank or foreign
as follows:
bank.
(mm) T ransm ittor’s fin an cia l
§103.11 Meaning of terms.
institution. The receiving financial
*
*
*
*
*
institution to which the transmittal
(e) B en eficiary ’s b an k. The bank or
order of the transmittor is issued if the
foreign bank identified in a payment
transmittor is not a financial institution
order in which an account of the
or foreign financial agency, or the
beneficiary is to be credited pursuant to
transmittor if the transmittor is a
the order or w hich otherwise is to make
financial institution or foreign financial
payment to the beneficiary if the order
agency. The term transmittor’s financial
does not provide for payment to an
institution includes an originator’s
account.
bank, except where the originator is a
*
*
*
*
*
transmittor’s financial institution other
(w) O riginator’s ban k. The receiving
than a bank or foreign bank.
bank to which the payment order of the
*
*
*
*
*
originator is issued if the originator is
3.
In § 103.33, paragraphs (e)
not a bank or foreign bank, or the
introductory text, (e)(l)(i) introductory
originator if the originator is a bank or
text, (e)(l)(ii), (e)(l)(iii), (e)(6)(i)(A)
foreign bank.
through (e)(6)(i)(G), (e)(6)(ii), (f)
*
*
*
*
*
introductory text, (f)(l)(i) introductory
(y) P aym ent order. An instruction of
text, (f)(l)(ii), (f)(l)(iii), (f)(6)(i)(A)
a sender to a receiving bank, transmitted
through (f)(6)(i)(G) and (f)(6)(ii) are
orally, electronically, or in writing, to
revised to read as follows:
pay, or to cause another bank or foreign
bank to pay, in a fixed or determinable
§ 103.33 Records to be made and retained
by financial institutions.
amount of money to a beneficiary if:
*
*
*
*
*
*
*
*
*
*
(e) B anks. Each agent, agency, branch,
(aa) R eceiving ban k. The bank or
or office located within the United
foreign bank to which the sender’s
States of a bank is subject to the
instruction is addressed.
requirements of this paragraph (e) with
(bb) Receiving fin a n cia l institution.
respect to a funds transfer in the amount
The financial institution or foreign
of $3,000 or more:
financial agency to which the sender’s
(1) R ecord keep in g requirem ents, (i)
instruction is addressed. The term
receiving financial institution includes a For each payment order that it accepts
as an originator’s bank, a bank shall
receiving bank.
*
*
*
*
*
obtain and retain either the original or
a microfilm, other copy, or electronic
(dd) R ecip ien t’s fin a n cia l institution.
record of the following information
The financial institution or foreign
relating to the payment order:
financial agency identified in a
*
*
*
*
transmittal order in which an account of *
(ii) For each payment order that it
the recipient is to be credited pursuant
accepts as an intermediary bank, a bank
to the transmittal order or which
shall retain either the original or a
otherwise is to make payment to the
microfilm, other copy, or electronic
recipient if the order does not provide
record of the payment order.
for payment to an account. The term

currencies, Gambling, Investigations,
Penalties, Reporting and recordkeeping
requirements, Securities.

44150

Federal Register / Vol. 60, No. 164 / Thursday, August 24, 1995 / Proposed Rules

(iii) for each payment order that it
accepts as a beneficiary’s bank, a bank
shall retain either the original or a
microfilm, other copy, or electronic
record of the payment order.
*
*
*
*
*
(6) E xceptions. * * *
(i) * * *
(A) A bank;
(B) A wholiy-owned domestic
subsidiary of a bank chartered in the
United States;
(C) A broker or dealer in securities;
(D) A wholly-owned domestic
subsidiary of a broker or dealer in
securities;
(E) The United States;
(F) A state or local government; or
(G) A federal, state or local
government agency or instrumentality;
and
(ii) Funds transfers where both the
originator and the beneficiary are the
same person and the originator’s bank
and the beneficiary’s bank are the same
bank.
(f)
N onban k fin a n cia l institutions.
Each agent, agency, branch, or office
located within the United States of a
financial institution other than a bank is
subject to the requirements of this

paragraph (f) with respect to a
transmittal of funds in the amount of
$3,000 or more:
(1) R ecord keep in g requirem ents, (i)
For each transmittal order that it accepts
as a transmittor’s financial institution, a
financial institution shall obtain and
retain either the original or a microfilm,
other copy, or electronic record of the
following information relating to the
transmittal order:
*
*
*
*
*
(ii) For each transmittal order that it
accepts as an intermediary financial
institution, a financial institution shall
retain either the original or a microfilm,
other copy, or electronic record of the
transmittal order.
(iii) for each transmittal order that it
accepts as a recipient’s financial
institution, a financial institution shall
retain either the original or a microfilm,
other copy, or electronic record of the
transmittal order.
*
*
*
*
*
(6) E xceptions. * * *
(i) * * *
(A) A bank;
(B) A wholly-owned domestic
subsidiary of a bank chartered in the
United States;

(C) A broker or dealer in securities;
(D) A wholly-owned domestic
subsidiary of a broker or dealer in
securities;
(E) The United States;
(F) A state or local government; or
(G) A federal, state or local
government agency or instrumentality;
and
(ii) Transmittals of funds where both
the transmittor and the recipient are the
same person and the transmittor’s
financial institution and the recipient’s
financial institution are the same broker
or dealer in securities.
In concurrence:
By the Board of Governors of the Federal
Reserve System, August 17,1995.

William \V. Wiles,
Secretary to the Board.
Dated: July 31,1995.
By the Department of the Treasury.

Stanley E. Morris,
Director, Financial Crimes Enforcement
Network.
[FR Doc. 95-20842 Filed 8 -2 3 -9 5 ; 8:45 am]
BILUNG CODE 6210-01-P; 4820-03-P

Federal Register / Vol. 60, No. 164 / Thursday, August 24, 1995 / Proposed Rules
DEPARTMENT OF THE TREASURY
31 CFR Part 103
RIN 1506-AA17

Amendment to the Bank Secrecy Act
Regulations Relating to Orders for
Transmittals of Funds by Banks and
Other Financial Institutions
AGENCY: Financial Crimes Enforcement

Network, Treasury.
ACTION: Proposed rule.
SUMMARY: In January 1995, the Financial

Crimes Enforcement Network (FinCEN)
of the Department of the Treasury
(Treasury) and the Board of Governors
of the Federal Reserve System (the
Board) jointly adopted a final rule (the
joint rule) requiring financial
,
institutions to collect and retain certain
information pertaining to transmittals of
funds. At the same time, FinCEN
adopted a final rule (the travel rule) that
required financial institutions to
include in transmittal orders certain
information collected under the joint
rule. Both the travel rule and the joint
rule were to become effective on January
1 ,1 9 9 6 . In response to industry
concerns about the application of the
joint rule and the travel rule to
transmittals of funds involving foreign
financial institutions, Treasury and the
Board today are proposing amendments
to the joint rule that conform the
definitions of the parties to transmittals
of funds to definitions found in Article
4A of the Uniform Commercial Code
(see document published elsewhere in
today’s Federal Register). This
document proposes amendments to the
travel rule that are necessary to reflect
the amended definitions in the joint
rule. These proposed amendments to
the travel rule also make the exceptions
applicable for the joint rule applicable
for the travel rule. To provide financial
institutions sufficient time to complete
their compliance programs for both
rules, the effective dates of the joint rule
and the travel rule are delayed until
April 1 ,1 9 9 6 (see documents published
elsewhere in today’s Federal Register).
DATES: Comments are due by September
25,1995.
ADDRESSES: Comments should be in
writing and addressed to: Office of
Regulatory Policy and Enforcement,
Financial Crimes Enforcement Network,
Department of the Treasury, 2070 Chain
Bridge Road, Vienna, VA 22182,
A ttention: Transmittal of Funds NPRM.
Comments may be inspected between
10:00 a.m. and 4:00 p.m. at the Treasury
Library, located in room 5030,1500
Pennsylvania Avenue, N.W.,

Washington, D.C. Persons wishing to
inspect the comments submitted should
request an appointment at the Treasury
Library, 202/622-0990.
FOR FURTHER INFORMATION CONTACT:

Roger Weiner, Assistant Director, Office
of Compliance and Enforcement, 202/
622-0400; Nina A. Nichols, AttomeyAdvisor, Office of Legal Counsel, 703/
905-3598.
SUPPLEMENTARY INFORMATION:

Background
The statute generally referred to as the
Bank Secrecy Act (Titles I and II of Pub.
L. 91-508, codified at 12 U.S.C. 1829b
and 1951-1959, and 31 U.S.C. 5 3 1 1 5330), authorizes the Secretary of the
Treasury (the Secretary), in ter alia, to
require financial institutions to keep
records and file reports that the
Secretary determines have a high degree
of usefulness in criminal, tax, or
regulatory investigations or proceedings,
and to implement counter-money
laundering programs and compliance
procedures. The Secretary’s authority to
administer the Bank Secrecy Act has
been delegated to the Director of
FinCEN.
Section 1515 of the Annunzio-Wylie
Anti-Money Laundering Act of 1992
(Title XV of Pub. L. 102-550 (AnnunzioWylie)), codified at 12 U.S.C. 1829b(b),
amended the Bank Secrecy Act (1) to
require the Secretary and the Board
jointly to promulgate, after consultation
with state banking supervisors,
recordkeeping requirements for
international funds transfers by
depository institutions and nonbank
financial institutions; and (2) to
authorize the Secretary and the Board
jointly to promulgate regulations for
domestic funds transfers by depository
institutions. Section 1517(a) of
Annunzio-Wylie, codified at 31 U.S.C.
5318(g) and (h), authorizes the
Secretary, in ter alia, to require financial
institutions to carry out anti-money
laundering programs. See 31 U.S.C.
5318(h)(1).
In January 1995, Treasury and the
Board jointly adopted a rule (the joint
rule) that imposed recordkeeping
requirements with respect to
transmittals of funds by banks and other
financial institutions (60 FR 220,
January 3,1995). Treasury also adopted
a rule (the travel rule) requiring
financial institutions (including banks)
to include in transmittal orders certain
information collected under the joint
rule (60 FR 234, January 3, 1995). The
joint rule contained definitions of the
terms used in both rules. These rules
were to become effective on January 1,
1996.

44151

Subsequent to publication of the joint
rule and the travel rule, it became
apparent that there was confusion
within the banking industry about the
application of the rules to transmittals
of funds involving foreign financial
institutions. Several banks and bank
counsel advised Treasury and the Board
that compliance with the rules was
complicated by the fact that the joint
rule definitions of parties to funds
transfers differed from the definitions in
Article 4A of the Uniform Commercial
Code (UCC 4A). Because a financial
institution’s obligations under the joint
and travel rules depend upon its role in
a particular transmittal of funds, the
differences between the Bank Secrecy
Act regulations definitions and UCC 4A
definitions have material operational
consequences.
Definitions of Parties to International
Transfers
The joint rule, when read together
with other definitions found in the Bank
Secrecy Act regulations at 31 CFR
103.11, limits the definition of the term
“bank” to offices located within the
U.S.; thus, a foreign bank could not be
an originator’s bank, intermediary bank
or beneficiary’s bank. In a transfer from
a foreign bank to a LT.S. bank (an
inbound transfer), the foreign bank
would be the originator and the U.S.
bank would be the originator’s bank.
UCC 4A, however, does not restrict the
definition of a bank in this way;
therefore, applying UCC 4A definitions
to an inbound transfer, the foreign bank
would be an originator’s (or
intermediary) bank and the U.S. bank
would be an intermediary (or
beneficiary’s) bank.
The joint rule added definitions of
financial institutions that correspond to
the UCC 4A definitions used for banks—
e.g., transmittor’s financial institution,
intermediary financial institution,
recipient’s financial institution. These
definitions resulted in further confusion
because the Bank Secrecy Act
regulations also limit the definition of
“financial institution” to offices located
in the U.S.
One other source of confusion is the
overlap among the terms used to refer to
banks and financial institutions. In
general, the travel rule obligations apply
equally to banks and to nonbank
financial institutions, because the terms
used for financial institutions include
the terms used to refer to banks. The.
travel rule imposes obligations only on
transmitters’ financial institutions and
intermediary financial institutions;

44152

Federal Register / Vol. 60, No. 164 / Thursday, August 24, 1995 / Proposed Rules

these terms include originators’ banks
-and intermediary banks.1

Obligations Under the Travel Rule as
Adopted

Industry Concerns About Application
of the Travel Rule

The middle column of the chart
reflects the roles of the parties to this
transmittal under the rules as adopted
in January 1995. The travel rule imposes
the following obligations:
1. New York Bank 1, as the
transmittor’s financial institution, must
include in the transmittal order to New
York Bank 2 the name, address and
account number of German Bank 2 (the
transmittor) (103.33(g)(l)(i)-(ii)). New
York Bank 1 would typically include
German Bank 2’s SWIFT Bank
Identification Code (BIC) or its CHIPS
Universal Identifier (UID) rather than its
name, address and account number;
however, Treasury believes that a
widely-used industry code, such as a
BIC, UID or routing number, would
comply with the requirements, so long
as the financial institution’s name,
address and account number can be
readily derived from its industry code.
In addition, New York Bank 1 would
have to include, if received, information
about Japanese Bank 1 (the recipient)
and California Bank (the recipient’s
financial institution) (103.33(g)(l)(v)(vi)).
2. New York Bank 2, as an
intermediary financial institution, must
include in its transmittal order to
California Bank the name, address and
account number of German Bank 2 (the
transmittor), if New York Bank 2
receives this information.
This requirement raises significant
operational concerns, because as a
matter of ordinary business practice,
German Bank 2 would be identified as
the “instructing bank” in the order
received by New York Bank 2, and
would not be identified in the order
executed by New York Bank 2. While
the bank identified in the originator’s
bank field generally is retained in
subsequent transmittal orders, the
identification in the instructing bank
field may change, and the information
may not be passed on to the next
receiving financial institution.
New York Bank 2 must also include
information on New York Bank 1 as the
transmittor’s financial institution
(103.33(g)(l)(vii)). Again, New York
Bank 1 would be identified as the
instructing bank in the transmittal order
executed by New York Bank 2, but the
information might be dropped from
subsequent transmittal orders.
New York Bank 2 would also have to
include, if received, the identity of
California Bank (the recipient’s financial
institution) and Japanese Bank 1 (the
recipient) (103,33(g)(2)(v)-(vi)).

The following hypothetical
transmittal of funds (illustrated on the
accompanying chart) illustrates the
differences between the effect of the
travel rule as published and its effect
following the proposed amendments to
the definitions in the joint rule. In this
transfer, German Company instructs its
bank, German Bank 1, to send a dollar
payment to Japanese Bank 2 for credit
to Japanese Company. German Bank 1
forwards the payment instructions to its
correspondent, German Bank 2. German
Bank 2 sends the payment instructions
via SWIFT to its New York
correspondent, New York Bank 1. New
York Bank 1 executes a transmittal order
via CHIPS to New York Bank 2. New
York Bank 2 forwards the transmittal
order via Fedwire to California Bank.
California Bank sends the transmittal
order via SWIFT to its correspondent,
Japanese Bank 1. Japanese Bank 1
forwards the transmittal order to
Japanese Bank 2, which credits the
account of Japanese Company.

Parties to
transfer

German
Company.
German
Bank 1.
German
Bank 2.
New York
Bank 1.
New York
Bank 2.
California
Bank.
Japanese
Bank 1.
Japanese
Bank 2.
Japanese
Company.

Definitions
of financial
institutions
limited to
U.S. offices
(travel rule
adopted in
January
1995)

Definitions are
parallel to UCC
4A definitions
of banks (pro­
posed amend­
ed travel rule)

Transmittor.
Transmitter's
Fi.
Transmittor . Intermediary FI.
Transmittor’s
FI.
Intermediary
FI.
Recipient’s
FI.
Recipient ....

Intermediary FI.
Intermediary FI.
Intermediary FI.
Intermediary FI.
Recipient’s FI.
Recipient.

1In limited circumstances, a beneficiary’s bank
will also have travel rule obligation?. If the
recipient's financial institution is not a bank, then
the bank that sends a transmittal order to the
recipient’s financial institution w ill be a
beneficiary’s bank and an intermediary financial
institution subject to the requirements of
103.33(g)(2).

3. California Bank, as the recipient’s
financial institution, is not subject to
travel rule requirements.
Effect of Proposed Amendments
In response to banking industry
concerns, Treasury and the Board have
proposed amendments to the joint rule
that will conform the definitions of
banks that are parties to funds transfers
to the definitions found in UCC 4A and
that will change the definitions of the
terms applicable to financial institutions
so that their meanings are parallel to the
definitions in UCC 4A. (See document
published elsewhere in today’s Federal
Register.)
The third column of the
accompanying chart reflects the effect of
the proposed amendments for
compliance with the travel rule. When
the definitions applicable to financial
institutions are conformed to the
definitions in UCC 4A, all of the U.S.
banks in the hypothetical transfer are
treated as intermediary financial
institutions. As an intermediary
financial institution, rather than a
transmittor’s financial institution, New
York Bank 1 is not required under the
travel rule to pass on the specified
information unless it actually receives it
from German Bank 2.
More importantly, the redefinition of
the parties to the transmittal means that
the information that must be passed on
pertains to German Company (the
transmittor), German Bank 1 (the
transmittor’s financial institution),
Japanese Bank 2 (the recipient’s
financial institution) and Japanese
Company (the recipient). These
definitions are more in accord with the
economic reality of the transaction and
with current industry practice, and the
information required is more likely to be
included in the transmittal orders.
With respect to the transmittal from
California Bank, Treasury does not
believe that the requirements placed on
the U.S. bank in an outbound transfer
significantly increase the cost of
complying with the travel rule.
Although California Bank, as an
intermediary financial institution,
would have to include information in its
transmittal order to Japanese Bank 1,
this information would typically be
included as a matter of standard
practice. Furthermore, California Bank
would not have the verification
obligations that it has as a beneficiary’s
bank. When considered in combination
with the proposed amendments to the
joint rule, Treasury believes that there is
an overall reduction in burden.

Federal Register / Vol. 60, No. 164 / Thursday, August 24, 1995 / Proposed Rules
Effect on Law Enforcement; Ongoing
Review
Treasury believes that these proposed
changes, while reducing the burden of
compliance, will maintain the
usefulness for law enforcement of the
information passed on in transmittal
orders pursuant to the travel rule. While
the requirement placed on an
intermediary financial institution is
limited to information that it receives,
the information passed on should be of
greater use because it will pertain to the
true transmittor and recipient in the
transaction. Furthermore, the financial
institutions that must be identified will
more likely be ones with which the
transmittor and recipient have account
relationships. Under the rule adopted in
January, transmittor’s financial
institutions and intermediary financial
institutions may not be required to pass
along information pertaining to these
parties when a transmittal involves a
foreign financial institution.
Under the proposed amendments, an
intermediary financial institution will
be required to pass on information to a
receiving financial institution even
when the receiving financial institution
is located outside the U.S. Treasury
believes that in the interests of
international cooperation in law
enforcement, and recognizing the use
for illicit purposes of the global
payments system, there is a law
enforcement benefit to this requirement.
In addition to the potential availability
of information that is forwarded to
foreign financial institutions, this rule
lays a foundation for international
cooperation in setting standards for
improving law enforcement efforts
while imposing a minimal
administrative burden on financial
institutions.
As stated in the joint and travel rules
when they were adopted, Treasury will
monitor the effectiveness of the rules to
assess their usefulness to law
enforcement and their effect on the cost
and efficiency of the payments system.
Within 36 months of April 1,1996,
Treasury will review the effectiveness of
the travel rule and will consider making
any appropriate modifications.
Addition of Exceptions
This proposed rule also proposes the
addition of new § 103.33(g)(3), which
incorporates exceptions to the joint rule
that appear in §§ 103.33(e)(6) and
103.33(f)(6). Those sections provide that
a transmittal of funds is not subject to
the requirements of the joint rule if the
parties to the transmittal are both banks
or brokers and dealers in securities, or
their subsidiaries, or government

entities, or if the transmittor and
recipient are the same person and the
transmittal involves a single bank or
broker/dealer. These exceptions apply
to the travel rule as well.
Request for Comment
These proposed amendments to the
travel rule specify that the requirements
of the travel rule apply only to financial
institution offices that are located
within the U.S. Treasury requests
comments on these proposed
amendments, and comments on the
effect oir the travel rule of the proposed
amendments to the joint rule.
Executive Order 12866
Treasury finds that these proposed
amendments to a final rule are not a
significant rule for purposes of
Executive Order 12866. The final rule is
not anticipated to have an annual-effect
on the economy of $100 million or
more. It will not affect adversely in a
material way the economy, a sector of
the economy, productivity, competition,
jobs, the environment, public health or
safety, or state, local, or tribal
governments or communities. It creates
no inconsistencies with, nor does it
interfere with actions taken or planned
by other agencies. Finally, it raises no
novel legal or policy issues. A cost and
benefit analysis is therefore not
required.
Regulatory Flexibility Act
Pursuant to section 605(b) of the
Regulatory Flexibility Act, Treasury
hereby certifies that these proposed
amendments to the final rule will not
have a significant economic impact on
a substantial number of small entities.
The proposed amendments eliminate
uncertainty as to the application of the
final rule and reduce the cost of
complying with the rule’s requirements.
Accordingly, a regulatory flexibility
analysis is not required.
Paperwork Reduction Act
The collection of information required
by the final rule whose amendment is
proposed in this document was
submitted by the Treasury to the Office
of Management and Budget in
accordance with the requirements of the
Paperwork Reduction Act (44 U.S.C.
3504(h)) under control number 15050063. See 60 FR 237 (January 3,1995).
The c Q l l e c t i o n is authorized, as before,
by 12 U.S.C. 1829b and 1959 and 31
U.S.C. 5311-5330.
The changes to the final rule proposed
in this document w ill eliminate
information collection requirements that
were required by the final rule.

44153

Therefore no additional Paperwork
Reduction Act submissions are required.
Unfunded Mandates Reform Act of
1995
Section 202 of the Unfunded
Mandates Reform Act of 1995, Public
Law 10 4 -4 (Unfunded Mandates Act),
signed into law on March 2 2 ,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. Treasury has
determined that it is not required to
prepare a written budgetary impact
statement for the proposed
amendments, and has concluded that
the proposed amendments are the most
cost-effective and least burdensome
means of achieving the stated objectives
of the rule.
1
List of Subjects in 31 CFR Part 103
Administrative practice and
procedure, Banks, banking, Brokers,
Currency, Foreign banking, foreign
currencies, Gambling, Investigations,
Penalties, Reporting and recordkeeping
requirements, Securities.
Amendment
For the reasons set forth in the
preamble, 31 CFR Part 103 is proposed
to be amended as set forth below:

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. In § 103.33, paragraphs (g)
introductory text and (g)(1) introductory
text are revised and paragraph (g)(3) is
added to read as follows:
§ 103.33 Records to be made and retained
by financial Institutions.
h

*

*

*

*

(g) Any transmittor’s financial
institution or intermediary financial
institution located within the United
States shall include in any transmittal
order for a transmittal of funds in the
amount of $3,000 or more, information
as required in this paragraph (g):
(1) A transmittor’s financial
institution shall include in a transmittal
order, at the time it is sent to a receiving
financial institution, the following
information:
*
*
*
*
*

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Federal Register / Vol. 60, No. 164 / Thursday, August 24, 1995 / Proposed Rules

(3) Exceptions. The requirements of
this paragraph (g) shall not apply to
transmittals of funds that are listed in
paragraphs (e)(6) or (f)(6) of this section.
Dated: July 31,1995.
Stanley E. Morris,
Director. Financial Crimes Enforcement
Network.
[FR Doc. 95-20845 Filed 8-23-95; 8:45 am]
BILLING CODE 4820- 03-P

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