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Ciw-4 $1 s FE D E R A L R ESERVE B A N K O F N E W YO R K June 24, 1980 FINANCIAL RECORDKEEPING BY BANKS Amendments Regarding Currency Transactions Over $10,000 To A ll State M ember Banks in the Second Federal Reserve D istrict: Printed on the following pages is the text of an official notice from the Department of the Treasury, containing amendments to its regula tions governing the reporting of individual currency transactions in excess of $10,000. The amendments will become effective July 7, 1980. Questions on the amendments may be directed to our Consumer Affairs and Bank Regulations Department (Tel. No. 212-791-5914). A nthony M. S olom on, President. DEPARTMENT OF THE TREASURY Office of [31 Financial Department ACTION: Final SUMMARY: a The report tution to and an to a (5) amends in amended within record limits rule transactions Report). 103] and and Foreign Reporting of Transactions Treasury after a copy of a of (1) a the bank to to governing the (IRS 4789, $10,000 requires transaction report information authority requires regulations regulation days specific bank's the excess 15 retain more the Part Rule This currency of CFR Secretary Recordkeeping Currency AGENCY: the a 5 years; a retain a (2) (3) from record individual Transaction institution requires requires the of of Currency c u s t o m e r ’s transactions and reporting financial occurs; concerning exempt make for Form the the file institution identity; reporting the to insti (4) further requirement; authorization of such exemption. EFFECTIVE FOR DATE: FURTHER July 7, INFORMATION 1980 CONTACT: Robert J. Deputy Assistant Stankey, Jr., Adviser Secretary to the (Enforcement) 202-566-5630 SUPPLEMENTAL the Title be INFORMATION: authority II, the October reported financial of to 26, the Transaction Report, currency other Under current amounts with the report the customary need listing transactions notice the of reports may conduct not be such with On a Form of of the 9, rulemaking be more timely; generally more with do the must exceed institutions also need (2 ) more 2 published in not the regulations complete or in currency to A exchange of currency. customers amounts in commensurate of Certain be 91-508, Currency the institution demand. the a profession financial upon was file $10,000 or under (P.L. involving established not issued Act institutions. Secretary revise 103) withdrawal than industry that Part Reporting transactions deposit, conclude there to CFR financial transactions the 1979, proposed filed each business, financial by States provided to certain involves reasonably customers September for which (31 Transactions Treasury United 4789, reported other that the the transaction bank regulations Foreign require within IRS and regulations, currency which concerned 1970) Secretary institution or Treasury Currency customer makes types a of reported. Federal Register require identification of that the (1) customer be furnished; (3) the financial institution be required to retain a copy of the report for five years; and (4) the exemption from the reporting require ment for transactions with an established customer maintaining a deposit relationship be limited to retail type businesses in the United States and that the location and character of the business be identified in the report of exempt customers furnished to Treasury. In addition, it was proposed that the exemption from reporting currency transactions with other financial institutions and foreign banks be removed in order to improve the Treasury Department's ability to obtain overall compliance with the regulations and alert the Department to unusual transnational movements of currency. The primary purpose of these changes would be to enhance the Department's capa bility to monitor and assure compliance with the Currency and Foreign Trans actions Reporting Act with regard to possible illegal or improperly reported flows of currency in the United States and abroad. A total of 46 comments were received on this proposal. significant comments are summarized and discussed below. The more DISCUSSION OF MAJOR COMMENTS: 1. in complying particular consuming politan Many with of the difficulty, and costly. centers have the comments revisions. felt The a that stated Some the comments significant that banks, proposed indicate number of no difficulty while not revisions that large a was anticipated anticipating were few banks any unnecessary, in transactions large in time metro currency. The vast majority of banks, however, do not appear to have a great many unusual currency transactions and, consequently, they will not be greatly affected by the change in reporting date or the information to be supplied. 2. In order to reduce unnecessary and unproductive reporting of routine currency transactions, banks have been able to exempt currency trans actions with certain depositors where such transactions are customary and do not exceed amounts which the bank may reasonably conclude are commensurate with the conduct of the lawful, domestic business of that customer. The proposed revision would have limited the exemption to an established depositor who is a U. S. resident and operates a retail type of establishment within the United States. A number of comments asked that the term "retail" be defined in the regulations and suggested that the exemption provision should include other types of businesses, as well as government agencies. The final rule provides a definition of retail type of business and allows banks to also exempt currency transactions with state, local, or Federal government agencies where such transactions are customary and commensurate with the authorized activities of the agency. It is expected that those exemptions will be limited to retail type businesses that operate from commercial premises. Exemptions also may be granted when warranted for certain transactions of an established depositor who is a United States resident and operates a sports arena, race track, amusement park, bar, restaurant, hotel, check cashing service licensed by state or local governments, vending macnine company, theater, or a firm that regularly withdraws more than $10,000 in order to pay its employees in currency. Banks may apply to the Assistant Secretary (Enforcement and Operations) for additional authority to grant an exemption if the bank believes that specific circumstances warrant such authority. Requests should be addressed as follows: Exemption Staff, Room 1134 Office of Enforcement and Operations U. S. Treasury Department Washington, D. C. 20220 3. One comment asked about the identification requirements for the customer's name and address, questioning whether the bank would be expected to verify the authenticity of the documents presented by the customer for identification. Bankers and shopkeepers normally ask for identification when a stranger presents a bank check or traveler's check to be cashed or accepted as payment. The same guidelines will apply when recording or reporting an unusual currency transaction. 4. Another comment asked whether microfilm and microfiche repro ductions of currency reports will be accepted for purposes of record retention. Compliance by banks with the requirements of the regulations is checked by bank examiners employed by the Federal Reserve System, the Federal Deposit Insurance Corporation, or the Comptroller of the Currency. Savings and loan associations are checked by the Federal Home Loan Bank Board. In order for the bank examiner to determine that the regulations are being complied with, it is 'necessary that a copy of the report be available among the bank records. A microfilm or microfiche copy of the report is acceptable for this purpose. 5. One commenter asked whether the term other "domestic banks" used in the proposal would include savings and loan associations. It does. Section 103.11 of the regulations defines the term "bank" as including: ic -k •Ar * * "(3) A savings and loan association or a building and loan association organized under the laws of any state of of the United States;" Definitions contained in Section 103.11 apply to each of the regulations in Part 103.6 6. Another comment suggested that the proposal represents a potential invasion of a bank customer's reasonable expectation of privacy in his financial affairs. This is not so: reports are only required for unusual cash trans actions involving more than $10,000 by individuals or by businesses that have not been exempted and, as a result, relatively few bank transactions are reported. Although commercial banks alone are estimated to have processed in excess of 30 billion transactions in 1979, only about 120,000 reports were filed, less than one for every 200,000 transactions. 4 In the reports Experience illegal establishing can has be highly shown the that, be made Another reported, financial indicates between the be currency the such in the from tax, Congress and found regulatory transactions to banks of as a There illegal in is are that investigations. indications is tranfers the concerning of is being these of to and such of is information needed for amounts of the by U. S. will the Service currency out shipments transfers under additional large scrutiny intercorporate Customs amounts that detect of the The smuggled evade that subsidiaries reportable regulations currency ability majority large evidence to domestic not small. amended increasing countries are community relatively of Department's and requirement and overwhelming financial activities foreign reports Treasury the the foreign entries physical result opposed between the entities purposes. comment those However, number provided additional improve as bookkeeping banking related deposited of Information that enforcement The form related will such institutions. in regulations. that requirements, criminal, frequently, 7. are in activities. dealings of reporting useful law of U. S. and authorities. substantially questionable movements of currency. 8. in the A institutions ulation has reporting been such to currency placed ment has One an that taxpayer because he evidencing DRAFTING the not a Deputy of in is AND under authority Stat. an the financial must that for aliens If a bank only for banker of is a states should the Such a bank when that request reg from regulations person required when financial final a presenting procedure Consequently, example, customer The proposed, industry. duplication them. transaction. clear the nonbank institution report nationality the on and amendment. initially banking the banks an a he the could amend to follow the has reason to banker does not official requests have one document residence. The principal Secretary Assistant and authors of this (Enforcement) Secretary document and Robert (Enforcement). Operations and the Office are J. However, of the William W. Stankey, Jr., other personnel General Counsel development. ISSUANCE: 1118, as the alien. number, Enforcement its it required Assistant AUTHORITY the make or that the proposed however, accepting on commented between nonbank determine resident, INFORMATION: Office 84 to customer the Act, burden the the Banks, before nationality participated exempt to identification is under commented procedure Adviser the to banks changed Deputy of bank undue Nickerson, to result changed institution transactions transactions. identification a would require been financial currency transaction have believe of that 9. appeared a nonbank reporting Accordingly, contained 31 U. S. in C. the the proposed Currency 1051-1122, as and regulations Foreign follows: are being Transactions issued Reporting R e g u la t io n s Section Regulations, as 103.22 Section (a) by, a shall of to currency (1) called Except (i) of transactions by nonbank in reports between Home file financial of the otherwise Federal financial of or more prescribed Federal forms and of in be of or which Such and furnished. writing (ii) each or Secretary Operations), banks; of payment $10,000. the shall banks; institutions report institution, than transactions Loan domestic a other by directed (Enforcement require or such forms for as Secretary Banks on shall currency or made Code transactions. institution exchange in be 31, currency through, not: Reserve of financial information (b) Title transaction shall Assistant of follows: Reports Each transfer, 103 as withdrawal, involves reports Part reads 103.22 deposit, all of revised, by this with Federal require (iii) the section reports require transactions with reports commercial banks. (b) (2) Except as Secretary (Enforcement reporting requirement (i) deposits account by an otherwise and of this or withdrawals and operates States. For the business is to ultimate provide their ment this (ii) resident park, an and bar, state and for boats are or not may who of is from business engaged the in a Assistant from the are the existing in States the retail providing that airplanes from an business except exempt the a United subsection, which by exempt following: currency type currency, or withdrawals established operates a restaurant, or of this writing is United type paid in dealerships not which included reporting of goods and require section. deposits by the primarily by automobiles, account by portion of in a bank depositor retail business transactions of a purpose consumers substantial section established resident a directed Operations), local of currency depositor sports hotel, who arena, check governments, is race cashing vending from a an United track, amusement service machine existing States licensed company, or theater. (iii) deposits, payments United and States or withdrawals, transfers or any by of 6 local its or exchanges state agencies or of currency governments, or or the instrumentalities. other (iv) withdrawals for payroll purposes from an existing account by an established depositor who is a United States resident and operates a firm that regularly withdraws more than $10,000 in order to pay its employees in currency. (c) must In be in amounts each instance amounts which commensurate business of or government state that the This section a (d) to in bank an provided does for not under permit apply to A exemptions to the (b) (ii), (1) identification engaged of the the in (b)(2) of S. of Upon the or have (b) been and kept and well of list exempted under subsection conclude of the do any of or exempt its and not lawful, transactions customary (b) exceed domestic with a agencies local or commensurate instrumentality. its transactions ( b ) , if the with C. the of as well in the bank's the the the to : bank with The limit the of shall record of paragraph that the has because concerning paragraph covers withdrawals, exemption. a report transactions provisions may the shall in reported provide whose and such taxpayer provisions customers Secretary to (b) all depositor been exemption dollar a each not and record business, (b)(2). under whether as The referred of have paragraph accordance as number paragraph granted list. banks which Secretary, the information under is it address, account exempted the of granted the name, transactions indicate circumstances Operations time centralized in that addressed 1134 in addresses and be authority otherwise 20220 exemption the not believes should and at as additional Department D. a bank requests Room for requirement, made provided also the such each be number, request containing of both, or Secretary Such Treasury depositors should deposits, the Staff, currency of agency to Enforcement be exemption group bank Office names as are the reporting paragraph must must include of Exemption record therefor conduct case States which a the Washington, (e) the United exemption. U. reason in exempted reasonably customary or the may institution. may an the amounts exemption such transactions bank activities financial A grant warrant or authorized nonbank with customer, instrumentalities, with the the of require* paragraph The exemptions 7 _ i j may be the usual reviewed any customer of revised, reads Section (a) A the the the be furnished. the of been within Code (e ) 30 The of bank with previously paragraph request. a (a) be to mailed after initial file exempted. must days Federal to respect or the paragraph Regulations, as Reports required shall be copy filed Internal each for a by 15 paragraph days The on called report period of in be five shall forms for shall (a) of following reports Revenue information of institution be within occurred. of All to filed transaction Secretary. financial of have under 31, require follows: Filing A may paragraph Secretary Title Commissioner by the Secretary's report 103.22 which required to of as 103.25 section with the 103.25 who in transactions Reports receives Secretary prescribed delivered Section on the as whose (f) otherwise bank by reports the be to b,e p r e s c r i b e d such forms retained years day filed from by shall the the date report. •k k k k k Section revised, reads as 103.26 Section 103.26 Before report is the effecting which of the is a verify such of an resident if a and the any, card, any is official case by examination of be of in 28, identification license verifying or a the a when credit document cashing card. identity of of each for is an by passport, any example, the be Richard J. Assistant Davis Davis Secretary (Enforcement & as a method recorded 1980 J. other acceptable shall Richard alien evidencing in report. (Signed) whose he instance, customer for made document normally the taxpayer Verification identity checks, In the be address record entity that must a a and as or effected. indicates Verification may or which name well security States other the as person to who United or to 103.22, record social of individual the respect and residence. the as section of transaction, transaction of with (a) or on Regulations Required transaction number, identification driver's Federal nationality used May of paragraph shall number, account identity a means DATED: Code presenting account not alien any under institution identification or 103, Identification individual identity, or Part required financial of of follows: Operations)
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