Regulatory Alert 96-RA-2, dated May 1, 1996, notified all federally insured credit unions about an interim final rule issued by the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) under the Bank Secrecy Act (BSA). The interim final rule changed the previous requirements for reporting every currency transaction in excess of $10,000 by exempting certain entities from routine reporting.
FinCEN recently announced a new final rule on currency transaction reporting exemptions. The final rule took effect on January 1, 1998. It is attached for your information. As a result of comments received on the interim rule, some changes were made to the final rule, primarily in the definition of “exempt person”. This definition now includes :
- A bank’s domestic operations;
- A department or agency of the United States, of any state, or of any political subdivision of any state;
- Any entity established under the laws of the United States, of any state, or of 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;
- Any entity, other than a bank, whose common stock or analogous equity interests are listed on the New York Stock Exchange or American Stock Exchange or whose common stock or analogous equity interests have been designated as a Nasdaq National Market Security listed on the Nasdaq Stock Market (except stock or interests listed under the separate “Nasdaq Small-Cap Issues” heading);
- Any subsidiary, other than a bank, of any entity described in above paragraph (a “listed entity”) that is organized under the laws of the United States or of any state and at least 51 percent of whose common stock is owned by the listed entity; and
- Any domestic financial institutions, other than banks, that are listed entities or subsidiaries of a listed entity.
You will note that some of these exemptions will not be applicable to credit unions’ operations since credit unions, as a general rule, do not deal with such entities.
An important provision carried over from the interim rule is that transactions by an “exempt person” as agent for another person who is the beneficial owner of the funds cannot be exempted.
The credit union must file a one-time Currency Transaction Report (CTR) with FinCEN designating the customer as exempt. Line 36 should be marked “Designation of Exempt Person” and items 2-1 (Part I, Section A) and items 37-39 (Part III) should be completed.
Please inform the individual responsible for compliance with the BSA of these changes.
Norman E. D’Amours