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FAQs
Question: When a customer brings in cash to purchase a monetary instrument, our bank’s policy requires the customer to first deposit the cash into an account, then, the monetary instrument can be purchased. If the amount of the purchase is between $3,000 and $10,000, is this transaction still subject to monetary instrument log record keeping requirements since the cash was first deposited into an account?
Answer: Yes, these transactions are subject to the record keeping requirements for monetary instruments when the cash is first deposited into an account, then used to purchase a monetary instrument. One of the sources that addresses this question is the BSA/AML Manual. The following is an excerpt from the manual:
Indirect Currency Purchases of Monetary Instruments
If a deposit accountholder first deposits currency into their deposit account to purchase monetary instruments in amounts between $3,000 and $10,000, FinCEN guidance states that the transaction is still subject to the recordkeeping requirements of 31 CFR 1010.415. This requirement to maintain records on indirect currency purchases of monetary instruments applies whether the transaction is conducted in accordance with a bank’s established policy or at the request of the customer. Generally, when a bank sells monetary instruments to deposit accountholders, the bank already maintains most of the information required by 31 CFR 1010.415 because of BSA requirements to collect customer information.
Question: A customer purchased a cashier’s check for $15,000. He requested that $8,000 be debited from his deposit account at our bank and he provided the remaining $7,000 in cash. Is this transaction reportable on our monetary instrument log since the amount of the cashier’s check was over $10,000?
Answer: Yes. The transaction should be recorded on your monetary instrument log. Transactions to purchase bank checks, cashier’s checks, money orders, etc. are required to be recorded under the BSA record keeping rules if the transaction “involves currency in amounts of $3,000 to $10,000”. Note that the requirement says “involves currency in amount of” and not the total amount of the purchase. In your example, the transaction is recorded since it involved an amount of currency between $3,000 and $10,000.
Question: I understand FinCEN recently released a proposed rule to implement the Corporate Transparency Act’s provision to establish a beneficial ownership registry. How does this change our bank’s responsibilities for collecting beneficial ownership information on legal entity customers?
Answer: At this point, February 2022, nothing has changed related to your bank’s beneficial ownership requirements under the Bank Secrecy Act. The current customer due diligence rules that require the collection of beneficial ownership information for accounts owned by legal entity customers are still in place. The provisions of the Corporate Transparency Act related to beneficial ownership will be finalized through a multi-phase process with at least three rulemakings. The FinCEN proposal released in December 2021 is the first step and related to the development of a registry for legal entity customers (referred to in the proposal as reporting companies) to submit their beneficial ownership information directly to FinCEN. The second rulemaking will provide guidelines for accessing the registry and FinCEN plans to amend the customer due diligence rules for banks in the third phase. Until the third rulemaking is final, banks must continue to follow the beneficial ownership rules that are currently in place.
Question: Our bank heard that FinCEN released a statement naming “national priorities” as required by the Anti-Money Laundering Act of 2020 (AML Act). What are these priorities and what do they mean for banks?
Answer. On June 30, 2021, FinCEN released a joint statement with other members of the federal intelligence community identifying for the first time, government-wide priorities for anti-money laundering and countering terrorist financing as required by the AML Act. In short, the priorities are areas deemed to be current threats to the U.S. financial system and national security and will be updated every four years. The following are the eight priorities identified last June:
- Corruption
- Cybercrime, including relevant cybersecurity and virtual currency considerations
- Foreign and domestic terrorist financing
- Fraud
- Transnational criminal organization activity
- Drug trafficking organization activity
- Human trafficking and human smuggling
- Proliferation financing
The publication of these priorities does not require immediate changes to a bank’s Bank Secrecy Act — Anti-Money Laundering program and does not create new supervisory expectations. FinCEN indicated in the June statement it will issue regulations at a later date to address how banks should incorporate these priorities into their BSA-AML programs. A proposed rule on this topic is expected to be released by FinCEN in April 2022. While waiting for the proposal to be released, banks may want to consider reviewing the eight priorities to gain an initial understanding of them and determine the bank’s current risk exposure to each priority.