16 September 2011
Electronic Filing of Bank Secrecy Act Reports
[Federal Register Volume 76, Number 180 (Friday, September 16, 2011)]
[Notices]
[Pages 57799-57801]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-23841]
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DEPARTMENT OF THE TREASURY
Financial Crimes Enforcement Network
Agency Information Collection Activities; Proposal That
Electronic Filing of Bank Secrecy Act (BSA) Reports Be Required;
Comment Request
AGENCY: Financial Crimes Enforcement Network (FinCEN), Treasury.
ACTION: Notice and request for comments.
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SUMMARY: FinCEN is proposing to require electronic filing of certain
Bank Secrecy Act (BSA) reports not later than June 30, 2012. This
requirement will significantly enhance the quality of our electronic
data, improve our analytic capabilities in supporting law enforcement
requirements and result in significant reduction in real costs to the
United States Government and ultimately to U.S. taxpayers.
Specifically, we propose mandatory electronic submission of all BSA
reports excluding the Report of International Transportation of
Currency or Monetary Instruments (CMIR).\1\
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\1\ All CMIRs are filed with the Department of Homeland
Security's Customs and Border Protection (CBP) at the port of entry/
exit or mailed to the Commissioner of Customs in Washington, DC.
There are no electronic filing capabilities at the ports. A CBP
contractor keys the data on the completed form into a data tape that
is electronically uploaded to the BSA database. FinCEN receives no
paper filed CMIRs.
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DATES: Comments should be submitted on or before November 15, 2011.
ADDRESSES: Written comments should be submitted to: Regulatory Policy
and Programs Division, Financial Crimes Enforcement Network, Department
of the Treasury, P.O. Box 39, Vienna, Virginia 22183, Attention: PRA
Comments--BSA Required Electronic Filing. BSA Required Electronic
Filing comments also may be submitted by electronic mail to the
following Internet address: regcomments@fincen.gov, with the caption,
``Attention: BSA Required Electronic Filing,'' in the body of the text.
Inspection of comments. Comments may be inspected, between 10 a.m.
and 4 p.m., in the FinCEN reading room in Vienna, VA. Persons wishing
to inspect the comments submitted must request an appointment with the
Disclosure Officer by telephoning (703) 905-5034 (not a toll free
call).
FOR FURTHER INFORMATION CONTACT: The FinCEN Regulatory Helpline at 800-
949-2732, select option 7.
SUPPLEMENTARY INFORMATION:
Title: Bank Secrecy Act, Reporting Forms, (31 CFR chapter X).
Abstract: The statute generally referred to as the ``Bank Secrecy
Act,'' Titles I and II of Public Law 91-508, as amended, codified at 12
U.S.C. 1829b, 12 U.S.C. 1951-1959, and 31 U.S.C. 5311-5332, authorizes
the Secretary of the Treasury (Secretary), inter alia, to require
financial institutions to file reports that are determined to have a
high degree of usefulness in criminal, tax, and regulatory matters, or
in the conduct of intelligence or counter-intelligence activities to
protect against international terrorism, and to implement counter-money
laundering programs and compliance procedures.\2\ Regulations
implementing Title II of the BSA appear at 31 CFR Chapter X. The
authority of the Secretary to administer the BSA has been delegated to
the Director of FinCEN.
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\2\ Language expanding the scope of the BSA to intelligence or
counter-intelligence activities to protect against international
terrorism was added by Section 358 of the Uniting and Strengthening
America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism Act of 2001 (the USA PATRIOT Act), Public Law
107-56.
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The Secretary was granted authority with the enactment of Title 31
U.S.C., to require financial institutions and other persons to file
various BSA reports. The information collected on the reports is
required to be provided pursuant to Title 31 U.S.C., as implemented by
FinCEN regulations found throughout 31 CFR chapter X. The information
collected pursuant to this authority is made available to appropriate
agencies and organizations as disclosed in FinCEN's Privacy Act System
of Records Notice.\3\
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\3\ Treasury Department bureaus such as FinCEN renew their
System of Records Notices every three years unless there is cause to
amend them more frequently. FinCEN's System of Records Notice was
most recently published at 73 FR 42405, 42407-9 (July 21, 2008).
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Current Action: In support of Treasury's paperless initiative and
efforts to make the government operations more efficient, FinCEN has
chosen to mandate electronic filing of certain BSA reports effective
June 30, 2012.
This requirement will significantly enhance the quality of our
electronic data, improve our analytic capabilities in supporting law
enforcement requirements, and result in a significant reduction in real
costs to the U.S. government and ultimately to U.S. taxpayers.
Specifically, we propose to make mandatory the electronic submission of
all BSA reports excluding the CMIR.\4\
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\4\ See supra note 1.
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Background: Since October 2002, FinCEN has provided financial
institutions with the capability of electronically filing BSA reports
through its system called BSA E-Filing. Effective August 2011, the
system was expanded to support individuals filing the Report of Foreign
Bank and Financial Accounts (FBAR) report. BSA E-Filing is a secure,
Web-based electronic filing system. It is a flexible solution for
financial institutions or individuals, whether they file one BSA report
or thousands. BSA E-Filing is an accessible service that filers can
access by using their existing internet connections regardless of
connection speed. In addition, it is designed to minimize filing errors
and provide enhanced feedback to filing institutions or individuals,
thereby providing a significant improvement in data quality.
BSA E-Filing, which is provided free of charge, features
streamlined BSA information submission; faster routing of information
to law enforcement; greater data security and privacy compared with
paper forms; long-term
[[Page 57800]]
cost savings to institutions, individuals, and the government; and
insures compatibility with future versions of BSA reports.
In addition, BSA E-Filing offers the following features not
available on paper:
Electronic notification of submissions, receipt of
submission, and errors, warnings, and alerts;
Batch validation;
Acknowledgement that a currency transaction report (CTR)
and or suspicious activity report (SAR) was filed;
Feedback reports to filers;
Faster receipt for money services businesses of
registration acknowledgement letter;
Ability to send and receive secure messages;
Use of Adobe forms that allows users to create templates,
reducing data entry but still providing for printing paper copies if
the filer wants to use a paper copy for its internal review and
approval processes;
Ability for supervisory users to assign system roles to
their staff; and
Availability of helpful training materials.
In 2010, we initiated a complete redesign and rebuilding of a new
system-of-record that significantly enhances FinCEN's current technical
capabilities to receive, process, share, and store BSA data. A
significant part of this upgrade was the implementation of state-of-
the-art electronic reporting or information collection tools. As of
July 1, 2011, over 84% of BSA reports are filed electronically with
FinCEN.\5\ FinCEN annually measures customer satisfaction with BSA E-
Filing and has a performance goal of at least 90% satisfaction; in
Fiscal Year 2010, 96% of customers were satisfied with BSA E-Filing.\6\
To enroll with BSA E-Filing financial institutions or individuals go to
http://bsaefiling.fincen.treas.gov/main.html and follow four easy
steps.
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\5\ As of July 2011, there are over 12,000 registered e-filers.
Of the 1250 major filers, 659 are currently e-filing. FinCEN
anticipates that many current paper filers will convert to e-file
when the new BSA E-Filing system becomes available.
\6\ See FinCEN's 2010 Annual Report, available at
http://www.fincen.gov/news_room/rp/files/annual_report_fy2010.pdf.
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As a result of the 2010 initiative, FinCEN is in the process of
fielding a new BSA Collection, Processing, and Analytic system. The new
system, which includes significant e-filing improvements, is designed
to support the most efficient state-of-the-art electronic filing. The
database will accept XML-based dynamic reports as well as certain other
file formats. The various file formats \7\ will be provided to permit
integration into in-house systems or for use by service providers.
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\7\ The XML Schema, ACSII, and the electronic file
specifications will be provided at no cost to filers.
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All filings (batch, computer-to-computer, and discrete) will be
initiated through the BSA E-Filing system \8\ using current
registration and log-in procedures. Although batch and computer-to-
computer filing processes will remain unchanged, the file format will
change to match the database. Batch and computer-to-computer filers
will file reports, which are based on an electronic file specification
that will be provided free of charge. Discrete filings (the replacement
for submitting a single paper report) will be based on Adobe LiveCycle
Designer ES dynamic forms. The discrete function is available for all
small business report filers (as well as individuals). The discrete
filing function will be accessed by logging into the BSA E-Filing
System and entering a pre-approved user ID and password. During log-in
to the discrete filing option, filers will be prompted through a series
of questions.\9\
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\8\ BSA E-Filing is a free Web-based service provided by FinCEN.
More information on the filing methods may be accessed at
http://bsaefiling.fincen.treas.gov/main.html.
\9\ A series of predetermined questions designed to establish
the type of institution and filing in much the same manner as used
in widely accepted income tax filing software.
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After log-in, a financial institution filing a report through the
discrete function will answer another set of questions that will
establish a subset of the data fields appropriate to the filer's
specific type of filing institution.
Today's proposal requiring filers to submit certain BSA reports
electronically using the free FinCEN BSA E-Filing system will provide a
range of benefits. Electronic filing will also facilitate the rapid
dissemination of financial and suspicious activity information in
connection with BSA filings, making information contained in these
filings more readily available to--and more easily searchable by--law
enforcement, the financial regulatory community, and other users of BSA
data. Additionally, the proposal to require certain BSA reports to be
filed electronically will result in a significant reduction in the use
of paper, producing a positive environmental impact. Further, the
implementation of the proposal has the potential to save the government
a few million dollars per year through the reduction of expenditures
associated with current paper processing, in particular the physical
intake and sorting of incoming reports, and the electronic keying of
reported information into the database.
Security: Mandatory electronic filing will provide increased
security not available with paper filings. At the present time, all
paper reports are mailed to the IRS Enterprise Computing Center--
Detroit (ECC-D) as unclassified mail with no special handling via the
U.S. Postal Service system. On occasion, mailed paper reports have been
delayed, and in some cases damaged beyond readability. A financial
institution may not discover that a report was not received by ECC-D
until many months after the report was due.\10\ For example, problems
with delivery of reports may not be discovered until the financial
institution is examined by its regulator, and the regulator compares a
list of the reports that are posted to the database against the
institution's official files. The BSA E-Filing System is a secure 128-
bit single socket layer protected Web-based filing system. Reports
received are acknowledged and any noted errors are reported back to the
filer. This process provides the filer with a record that the required
filing was received, as well as suggestions on how to improve the
accuracy of their future reports. Reports originated by the filer are
posted securely directly to the database, thereby significantly
reducing or eliminating possibility of data compromise.
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\10\ The missing report becomes more critical if it was
reporting suspicious activity--especially when relating to terrorist
financing.
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Filer Impact Assessment
a. Depository institutions: Based on information available we
believe this change in filing procedures will have minimal impact on
depository institutions. All depository institutions are currently
required to file quarterly call or thrift financial reports with their
regulator electronically through a Web-based portal provided by the
appropriate federal regulator. This same electronic connectivity may be
used to file BSA reports with FinCEN by logging in to the BSA E-Filing
System Web-based portal.
b. Broker-Dealers, Future-Commission Merchants (FCMs), Introducing
Brokers in Commodities (IB-Cs), and Mutual Funds: \11\ Based on
information available we believe this change in filing procedures will
have minimal impact on these filing institutions. This group is highly
automated and enjoys robust electronic buying and selling systems with
sophisticated processing
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and reporting systems.\12\ Currently the Securities and Exchange
Commission (SEC) mandates electronic filing,\13\ as does the Commodity
Futures Trading Commission (CFTC).\14\
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\11\ FinCEN is considering adding a SAR reporting requirement to
Investment Adviser's (IA's) registered with the SEC. Mandatory e-
filing will have minimum impact on this group.
\12\ Currently both the SEC and the CFTC require electronic
reporting, The SEC through the EDGAR system and the CFTC through the
NFC Windjammer and Easy File systems.
\13\ See http://www.sec.gov/info/edgar/regoverview.htm.
\14\ For financial institutions subject to CFTC oversight See
NFA Electronic Filings at
http://www.nfa.futures.org/NFA-electronic-filings/index.HTML.
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c. Insurance companies: Based on information available we believe
this change in filing procedures will have minimal impact on these
institutions. This group is highly automated.\15\
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\15\ See the National Insurance Producer Registry (NIPR) at
http://www.nipr.com/. NIPR is a unique public-private partnership
that supports the work of the states and the National Association of
Insurance Commissioners (NAIC) in making the producer-licensing
process more cost-effective, streamlined and uniform for the benefit
of regulators, the insurance industry and the consumers they protect
and serve.
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d. Casinos and Card Clubs: \16\ Based on information available we
believe this change in filing procedures will have minimal impact on
these institutions.
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\16\ Casinos and Card Clubs with gross annual gaming revenues in
excess of $1 million (see 31 CFR1010.100 (t)(5)(ii) and (6)(ii)).
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e. Money Services Businesses (MSBs): Information gained from a
review of the MSB filings of the currency transaction report (CTR),
SAR, and Registration of Money Services Business (RMSB) forms indicates
that some impact to this group can be expected. Information in trade
journals and other publications, along with informal comments from the
Internal Revenue Service Small Business/Self Employed, indicate that
most filers have Internet connectivity. MSBs routinely accept and
process credit card transactions requiring automated communications
with the approving card center. They also routinely place orders for
goods and services through the Internet and electronically access bill
paying services. Additionally, basic Internet access can be obtained
through a simple inexpensive dial-up connection or at professional
external Internet facilities such as service providers for those MSBs
without Internet connectivity. Lastly, FinCEN has included provisions
for requesting a hardship exception in this notice in case unforeseen
situations arise.\17\
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\17\ See Filer impact paragraph ``g.''
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f. Service Providers: There is a network of third-party service
providers with which financial institutions may contract to provide
electronic filing services to the BSA E-Filing System. FinCEN believes
this group to be highly automated and many are already using the BSA E-
Filing System. We do not anticipate that this proposal will have an
impact on this group.
g. Small businesses: \18\ In support of small businesses, FinCEN's
Office of Compliance will provide a temporary hardship exemption
capability. A small business may request, and may be granted, an
emergency extension of up to one year if it can document a sufficiently
serious problem that prevents compliance with the new filing
requirements. The approved extension will be effective for one year
from the effective date of this notice.\19\ A hardship request based
solely on a lack of Internet connectivity or a business decision to
restrict Internet connectivity will not be considered adequate
justification for an extension.
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\18\ See the Small Business Administration's (SBA) Web site
http://www.sba.gov/content/what-sbas-definition-small-business-concern
for SBA's definition of a small business concern.
\19\ Request for emergency extension will be mailed to:
Department of the Treasury, Financial Crimes Enforcement Network,
Attention RPP-CP, PO Box 39, Vienna, VA 22183 or may be e-mailed to:
regcomments@fincen.gov.
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h. Individual filers: Effective August 2011, FinCEN expanded its
support of electronic filing to individuals.\20\ The capability to file
the Report of Foreign Bank and Financial Accounts (FBAR Form TD F 90-
22.1) became available and individuals worldwide can sign up to file
their individual FBAR's by accessing the FinCEN E-Filing Web site.
Based on new applications to date, there is no indication of any issues
with individuals using this new capability.
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\20\ See page 3 Background.
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Paperwork Reduction Act (PRA)
Type of Review: Review of a new proposal to mandate the electronic
filing of BSA reports.
Affected Public: Businesses or other for-profit and non-profit
institutions.
Frequency: As required.
Estimated Burden: Effective with the FinCEN IT Modernization, BSA
reporting will be supported by seven BSA reports.\21\ The burden for
electronic filing and recordkeeping of each BSA report is reflected in
the OMB approved burden \22\ for each of these reports. The non-
reporting recordkeeping burden is reflected separately.\23\
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\21\ BSA-SAR, BSA-CTR, Designation Of Exempt Person, CMIR, RMSB,
Foreign Bank Account Report, and the Report of Cash Over $10,000
Received in a Trade or Business (Form 8300).
\22\ See OMB Control Numbers 1506-0065, 1506-0064, 1506-0009,
1506-0013, 1506-0014, 1506-0018.
\23\ See OMB Control Numbers 1506-0051 through 1506-0059.
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Estimated number of respondents for all reports = 74,900.\24\
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\24\ All filers subject to BSA reporting requirements excluding
CMIR. See supra note 1.
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Estimated Total Annual Responses for all reports = 16,172,770.
Estimated Total Annual Burden Hours = 20,874,761.\25\
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\25\ Includes all reporting and recordkeeping burden associated
with filing BSA reports.
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An agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information unless the collection of
information displays a valid OMB control number. Records required to be
retained pursuant to the BSA must be retained for five years.
Request for Comments
Comments submitted in response to this notice will be summarized
and/or included in the request for OMB approval. All comments will
become a matter of public record. Comments are invited on: (a) Whether
the collection of information only by electronic means is necessary for
the proper performance of the functions of the agency, including
whether the information shall have practical utility; (b) the accuracy
of the agency's estimate of the burden of the collection of
information; (c) ways to enhance the quality, utility, and clarity of
the information to be collected; (d) ways to minimize the burden of the
collection of information on respondents (filers), including through
the use of automated collection techniques or other forms of
information technology; (e) the practicality of utilizing external
Internet facilities or service providers to occasionally file BSA
reports, (f) estimates of capital or start-up costs and costs of
operation, maintenance, or purchase of services to provide information
by filers that currently do not have Internet access, and (g) the
enhanced security of sensitive information and significant cost savings
of electronic filing.
Dated: September 13, 2011.
James H. Freis, Jr.,
Director, Financial Crimes Enforcement Network.
[FR Doc. 2011-23841 Filed 9-15-11; 8:45 am]
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