eBook | Regulatory Guide To Money Transmission & Payment Laws In The U.S

Federal Reserve, FinCEN Seek to Amend the BSA Recordkeeping Rule and Travel Rule

The Board of Governors of the Federal Reserve System and the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) jointly issued a notice of proposed rulemaking (NPRM) to the Bank Secrecy Act (BSA) Recordkeeping Rule and Travel Rule. The update would lower the current $3,000 requirement to collect, retain and transmit information on funds transfers and transmittals of funds to $250 for transactions that begin or end outside the United States. Additionally, it would supersede the existing definition of money to include convertible virtual currencies (CVCs).

The specifics: 

The NPRM would lower the threshold for cross-border transactions that trigger the Recordkeeping Rule and Travel Rule from $3,000 to $250. This means that for any transaction of $250 or more that a money transmitter processes that originates or terminates in the United States, the money transmitter would be required to obtain and maintain a record that includes the sender’s Social Security number, among other information. FinCEN says that the basis for the change is that a substantial volume of potentially illicit funds transfers and transmittals of funds fall below the $3,000 threshold. Due to this, FinCEN and other law enforcement agencies (including the Department of Justice’s Money Laundering and Asset Recovery Section) support lowering the threshold to an amount that would likely include the vast majority of cross-border funds transfers. This would significantly increase the number of transactions that will now become subject to the Recordkeeping and Travel Rules.

Additionally, the amendment intends to make the definition of money more inclusive. The NPRM would modify the definition of money to include “a medium of exchange currently authorized or adopted by a domestic or foreign government, including any digital asset that has legal tender status in any jurisdiction,” and “a medium of exchange (such as cryptocurrency) that either has an equivalent value as currency, or acts as a substitute for currency, but lacks legal tender status.” Since 2013, FinCEN has interpreted its regulations to apply to what it terms “CVCs” on the basis that the “definition of a money transmitter [under the BSA] does not differentiate between real currencies and convertible virtual currencies. FinCEN’s reasoning is that a CVC is not “currency” but a “value that substitutes for currency” and, therefore, a person that “accepts and transmits a convertible virtual currency or buys or sells convertible virtual currency for any reason is a money transmitter.”

All financial institutions would be required to evaluate and update their BSA programs based on the rules the agencies pass.

Share this post

Share on facebook
Share on google
Share on twitter
Share on linkedin
Share on pinterest
Share on print
Share on email