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 Treasury Department Issues Regulations on Compliance with USA PATRIOT Act


WASHINGTON, DC - The Treasury Department today issued and sent to the Federal Register for publication three proposed rules, one interim rule and one final rule for financial institutions and businesses regarding compliance with anti-money laundering provisions of the USA PATRIOT Act.

The Treasury Department issued an interim rule and a companion notice of proposed rulemaking to add a new provision to its regulations under the Bank Secrecy Act. The new regulations implement the provision in the USA PATRIOT Act that requires trades and businesses to report cash transactions of more than $10,000 (or two or more related transactions involving more than $10,000) and certain transactions involving monetary instruments to Treasury's Financial Crimes Enforcement Network (FinCEN). Similar reports are currently required to be made to the Internal Revenue Service (IRS), and the IRS issued a final rule amending its regulations to reference the requirement that the information is also required to be reported to FinCEN. Trades and businesses required to report this information will do so using one form jointly prescribed by FinCEN and the IRS. There are no new reporting or recordkeeping requirements.

The Treasury Department issued a proposed rule that codifies interim guidance issued on November 20, with some modifications. The guidance was issued to assist banking institutions on compliance with two anti-money laundering provisions of the PATRIOT Act that become effective Dec. 26, 2001. The first provision prohibits certain U.S. financial institutions from providing correspondent accounts to foreign shell banks, and requires that such institutions take reasonable steps to ensure that foreign banks not use correspondent accounts to indirectly provide banking services to foreign shell banks. The second provision requires certain U.S. financial institutions to keep records of the owners of foreign banks with correspondent accounts and their U.S. process agents. The proposed rule codifies the interim guidance with some modifications and proposes to apply the same requirements to securities brokers and dealers.

The Treasury Department issued a proposed rule to require securities brokers and dealers to file suspicious activity reports in connection with customer activity that indicates possible violations of law or regulation, including violations of the Bank Secrecy Act. Application of this requirement to brokers and dealers closely mirrors the reporting regime currently in place for banks.

FinCEN issued a notice to money transmitters and issuers, sellers and redeemers of money orders and checks to remind them of the January 1, 2002 effective date for the requirement to report suspicious transactions. In addition, the notice explains which form these businesses must use to report suspicious transactions.

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