US Agencies Target Cross-border Transfers in Proposed Rule Change

Financial institutions will have to collect, retain, and transmit information related to any international transaction over $250, including those involving crypto assets.

FinCEN (US Treasury’s Financial Crimes Enforcement Network) and the Federal Reserve Board are inviting comments on a proposed rule that would amend the recordkeeping regulations under the Bank Secrecy Act.

Additionally, FinCEN, pursuant to its sole authority, is proposing amendments to the travel rule.

Under the current recordkeeping and travel rule regulations, financial institutions must collect, retain, and transmit certain information related to funds transfers and transmittals of funds over USD 3,000.

The proposed rule would lower the applicable threshold from USD 3,000 to USD 250 for international transactions, while keeping the threshold unchanged for domestic transactions.

According to FinCEN, data derived from approximately 2,000 SARs related to potential terrorist financing filed by money transmitters between 2016 and 2019 referenced approximately 1.29 million underlying transmittals of funds.

Of this, only 17,000 involved domestic-only transactions, i.e. approximately 99 percent of the 1.2 million transactions began or ended outside the US.

Further, the mean and median dollar-value of the transactions mentioned in those SARs were approximately USD 509 and USD 255, respectively.

“The Agencies believe that lowering the threshold to capture smaller-value cross-border funds transfers and transmittals of funds would be valuable for law enforcement and national security authorities,” the document says.

The proposed rule also further clarifies that the regulations apply to transactions involving convertible virtual currencies, as well as transactions involving digital assets with legal tender status in any jurisdiction, by clarifying the meaning of “money” as used in certain defined terms.

The proposals, available here, are open for comment until 27 November 2020.

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