SUPPLEMENTARY INFORMATION:

I. Statutory and Regulatory Provisions

The legislative framework generally referred to as the Bank Secrecy Act (BSA) consists of the Currency and Foreign Transactions Reporting Act of 1970, as amended by the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act) ^[1] and other legislation, including the Anti-Money Laundering Act of 2020 (AML Act).^[2] The BSA is codified at 12 U.S.C. 1829b and 1951-1960 and 31 U.S.C. 5311-5314 and 5316-5336, and notes thereto, with implementing regulations at 31 CFR chapter X.

The BSA authorizes the Secretary of the Treasury (Secretary) to, inter alia, require financial institutions to keep records and file reports that are determined to have a high degree of usefulness in criminal, tax, or regulatory matters, risk assessments or proceedings, or in the conduct of intelligence or counter-intelligence activities to protect against terrorism, and to implement anti-money laundering/countering the financing of terrorism (AML/CFT) programs and compliance procedures.^[3] The authority of the Secretary to administer the BSA has been delegated to the Director of FinCEN.^[4]

Under 31 U.S.C. 5313, the Secretary is authorized to require financial institutions to report currency transactions exceeding $10,000. Regulations implementing 31 U.S.C. 5313 are found at 31 CFR 1010.310 through 1010.314, 31 CFR 1021.311, and 31 CFR 1021.313. The Money Laundering Suppression Act of 1994 amended the BSA to create certain mandatory exemptions applicable to banks from the requirement for financial institutions to file currency transaction reports (CTRs), and to give the Secretary authority to create additional such exemptions.^[5] Regulations implementing this exemption authority, including by requiring the collection of information on FinCEN Form 110, Designation of Exempt Person (“DOEP Report”), are found at 31 CFR 1020.315.

Under 31 CFR 1020.315(a), a bank is not required to file a CTR with respect to any transaction in currency between exempt persons and the bank, or between an exempt person and other banks that are affiliated with the bank.^[6]

31 CFR 1020.315(b) sets out that an exempt person is: (1) a bank, to the extent of such bank's domestic operations; (2) a department or agency of the United States, of any State, or of any political subdivision of any State; (3) any entity established under the laws of the United States, any State, or any political subdivision of any State, or under an interstate compact, that exercises governmental authority on behalf of the United States, any such State, or any such political subdivision; (4) any entity, other than a bank, whose common stock or analogous equity interests are listed on the New York Stock Exchange, the American Exchange, or the NASDAQ Stock Market (a “listed entity”), provided that, if the listed entity is a financial institution other than a bank, it is an exempt person only to the extent of its domestic operations; (5) any subsidiary, other than a bank, of a listed entity mentioned in the previous item (4) that is organized under the laws of the United States or of any State, provided that the listed entity owns at least 51 percent of the equity interest of the subsidiary, and subject to the qualification that if the subsidiary is a financial institution other than a bank, it is an exempt person only to the extent of its domestic operations; (6) any other commercial enterprise, with certain exceptions, that maintains a transaction account at the bank for at least two months, frequently engages in transactions with the bank in currency in excess of $10,000, and is incorporated or organized under the laws of, or is registered as and eligible to do business within, the United States or a State (a “non-listed business”), but only to the extent of the non-listed business customer's domestic operations and only with respect to transactions conducted through the non-listed business customer's exemptible accounts; or (7) any other person, with certain exceptions, that maintains a transaction account at the bank for at least two months, operates a firm that frequently withdraws more than $10,000 in order to pay its U.S. employees in currency, and is incorporated or organized under the laws of, or is registered as and eligible to do business within, the United States or a State (a “payroll customer”), but solely with respect to withdrawals for payroll purposes from existing exemptible accounts.^[7]

31 CFR 1020.315(c)(1) requires a bank to designate an exempt person by filing ( printed page 65014) the DOEP Report ^[8] within 30 calendar days after the day of the first reportable transaction in currency with the person that the bank seeks to exempt from reporting. A bank holding company or one of its bank subsidiaries may make such a designation on behalf of any or all of the bank holding company's bank subsidiaries by listing those bank subsidiaries in the DOEP Report that it files.^[9] However, a bank is not required to file a DOEP Report for transfer of currency to or from: (1) any of the 12 Federal Reserve Banks; (2) a bank, to the extent of such bank's domestic operations; (3) a department or agency of the United States, of any State, or of any political subdivision of any State; or (4) any entity established under the laws of the United States, any State, or any political subdivision of any State, or under an interstate compact between two or more States, that exercises governmental authority on behalf of the United States or any such State or political subdivision.^[10]

31 CFR 1020.315(d) requires a bank to review at least once annually the continued eligibility of an exempt person that is a (1) listed entity, (2) subsidiary of a listed entity, (3) non-listed business customer, or (4) payroll customer. As part of the annual review, a bank must also review the application to each existing account of a non-listed business or payroll customer of the monitoring system that 31 CFR 1020.315(h)(2) requires the bank to maintain (related to suspicious activity monitoring).

Under 31 CFR 1020.315(e), a bank must take steps to assure itself that an exempt person meets the definition of that term ( see31 CFR 1020.315(b), summarized above), document the basis for its conclusion, and document its compliance with the terms of the exemption, including the operating rules in 31 CFR 1020.315(e)(2)-(9). A bank must also take steps to document compliance with its suspicious activity monitoring obligations under 31 CFR 1020.315(h)(2). The steps that the bank takes under 31 CFR 1020.315(e) must be those that a reasonable and prudent bank would take and document to protect itself from fraud or loss based on misidentification of a person's status and, in the case of the suspicious activity monitoring obligations, to identify suspicious transactions.

31 CFR 1020.315(h)(1) states that the CTR exemption rules do not relieve a bank of its obligation to report any suspicious transactions pursuant to 31 CFR 1020.320, including any suspicious transactions or attempted transactions in currency associated with the accounts of an exempt person, or relieve a bank of any other reporting or recordkeeping obligation imposed under the authority of the BSA.

Under 31 CFR 1020.315(h)(2), a bank must establish and maintain a monitoring system that is reasonably designed to detect, for each account of a non-listed business or payroll customer, transactions in currency that would require a bank to file a suspicious activity report.

II. Paperwork Reduction Act of 1995 (PRA)  ¹¹

Title: Transactions of exempt person (31 CFR 1020.315), and FinCEN Form 110—DOEP Report.

OMB Control Number: 1506-0012.

Report Number: FinCEN Form 110—DOEP Report.

Abstract: FinCEN is issuing this notice to renew the OMB control number for the transactions of exempt person regulations and the DOEP Report.

Affected Public: Businesses or other for-profit institutions, and non-profit institutions.

Type of Review: Renewal without change of a currently approved information collection.

Frequency: As required.

Estimated Number of Respondents: 10,062 banks.^[12]

Estimated Number of Responses: 15,105 DOEP Reports.^[13]

Estimated Recordkeeping Burden:

In Part 1 of this notice, FinCEN describes the distribution of the estimated number of financial institutions, by type, affected by the regulatory requirements. In Part 2, FinCEN proposes for review and comment a renewal of the calculation of the annual PRA burden that includes a scope and methodology similar to that used in the 2021 notice to renew the OMB control number associated with this information collection requirement.^[14]

Part 1. Distribution of the Financial Institutions Covered by This Notice

The distribution of financial institutions, by type, covered by this notice is reflected in table 1 below.

In connection with a variety of initiatives FinCEN is undertaking to implement the AML Act, FinCEN intends to conduct, in the future, additional assessments of the PRA burden associated with BSA requirements.

Part 2. Annual PRA Burden and Cost

FinCEN continues to estimate the annual hourly burden of the designation of exempt persons as one hour per report. This estimate covers the burden of: (1) reporting, which is estimated to require an average of 45 minutes to fill out and file the report; and (2) recordkeeping and maintenance, which is estimated to require an average of 15 minutes per report. FinCEN believes that the information required to be included on the DOEP Report is basic information that banks need to maintain to conduct business. The BSA E-filing ( printed page 65015) system prompts banks to save the report after submission.

FinCEN's estimate of the annual PRA burden, which is based on reporting activity in the previous calendar year, therefore, is 15,105 hours, as detailed in table 2 below:

FinCEN is utilizing the same fully loaded composite hourly wage rate of $106.30 utilized in the 2024 notices of proposed rulemaking (NPRMs) entitled Customer Identification Programs for Registered Investment Advisers and Exempt Reporting Companies and Anti-Money Laundering and Countering the Financing of Terrorism Programs, as well as in recent 60-Day Notices to renew OMB control numbers corresponding to specific BSA regulations.^[15]

The total estimated cost of the annual PRA burden is $2,421,331.50, as reflected in table 3 below:

Estimated Number of Respondents: 10,062 banks, as set out in table 1.

Estimated Total Annual Responses: 15,105 DOEP Reports.^[16]

Estimated Total Annual Reporting and Recordkeeping Burden: The estimated total annual reporting and recordkeeping burden is approximately 15,105 hours, which is comprised of the total annual reporting and total annual recordkeeping burdens described below.

Estimated Total Annual Reporting Burden: The estimated total annual reporting burden is approximately 11,329 hours, as set out in table 2.

Estimated Total Annual Recordkeeping Burden: The estimated total annual recordkeeping burden is approximately 3,776 hours, as set out in table 2.

Estimated Total Annual Reporting and Recordkeeping Cost: The estimated total annual PRA cost is approximately $2,421,331.50, as set out in table 3.

An Agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid OMB control number. Records required to be retained under the BSA must be retained for five years.

Request for Comments: Comments submitted in response to this notice will be summarized and/or included in the request for OMB approval. All comments will become a matter of public record. Comments are invited on: (1) whether the collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; (2) the accuracy of the agency's estimate of the burden of the collection of information; (3) ways to enhance the quality, utility, and clarity of the information to be collected; (4) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology; and (5) estimates of capital or start-up costs and costs of operation, maintenance, and purchase of services to provide information.

89 FR 65012