FinCEN and the Federal Reserve Board ("FRB") (together, the "Agencies") proposed to significantly reduce the dollar-value threshold at which the Bank Secrecy Act ("BSA") requires financial institutions to obtain, retain and transmit information on certain fund transfers and transmittals.
In a joint proposed rule, the Agencies proposed to reduce the threshold under the "Recordkeeping Rule" (BSA Rules 1010.410(e) and 1020.410 (a)) and under the "Travel Rule" (BSA Rule 1010.410(f)) from $3,000 to $250 for funds transfers and transmittals that begin or end outside the United States. The Agencies stated that the reduction is intended to provide for the "preservation of information that would benefit law enforcement and national security investigations." FinCEN stated that the reduction is appropriate, as it may supplement potentially unidentified suspicious transactions for which financial institutions may fail to submit suspicious activity reports. The Agencies also stated that the rule is workable today due to the reduced costs of electronic storage and retrieval.
The Agencies also proposed clarification in the BSA regulations, for purposes of the Recordkeeping and Travel Rules, of the definition of "money" to include cryptocurrency. The proposed amendments would supersede the definition of "money" in the Uniform Commercial Code (or "UCC").
Comments on the proposed rule must be submitted no later than 30 days after its publication in the Federal Register.
Commentary / Christian Larson
FinCEN's proposal would bring a vastly larger number of transactions within the scope of the Recordkeeping and Travel Rules. Although FinCEN and the FRB "believe that the effect of lowering the $3,000 threshold on financial institutions . . . is likely to be low," financial institutions themselves may believe otherwise. The proposal may draw particular ire from crypto exchanges, which, as a class, have only recently begun implementing measures to comply with the Travel Rule.
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