FinCEN, Fed withdraw 2020 proposal reducing BSA recordkeeping, travel rule thresholds; more

A proposed rule issued near the close of the first Trump administration that would have lowered the threshold for retaining information on certain transfers and transmittals of funds – and added convertible virtual currency and digital assets to the requirement – is withdrawn, according to a Federal Register notice Tuesday.

Treasury’s Financial Crimes Enforcement Network (FinCEN) and the Federal Reserve Board in October 2020 issued a proposal to modify a recordkeeping rule under the Bank Secrecy Act (BSA) under which financial institutions must collect and retain information on certain funds transfers and transmittals of funds; as FinCEN also proposed modifying its “travel” rule on the transmittal of such information.

The proposal, withdrawn as of Nov. 9, would have:

• reduced the recordkeeping threshold from $3,000 to $250 for funds transfers and transmittals of funds that begin or end outside the United States;
• reduced from $3,000 to $250 the threshold in FinCEN’s travel rule requiring financial institutions to transmit to other financial institutions in the payment chain information on funds transfers and transmittals of funds that begin or end outside the United States;
• clarified the meaning of “money” to specify that the rules apply to domestic and cross-border transactions involving convertible virtual currency (CVC) and digital assets that have legal tender status to a recipient.

The agencies said they received nearly 3,000 comment letters generally opposed to the recordkeeping rule changes for international transactions and mixed on the addition of CVC to the requirements.

It says the agencies withdrew the rule for two primary reasons: the long period since the proposal was issued and the belief that more feedback would be useful now; and recent developments in the CVC industry and emerging new legal frameworks.

“The Agencies believe that any future, potential amendments to the Recordkeeping Rule and Travel Rule related to CVC should be considered in light of these recent developments to ensure that such amendments are fit for purpose,” it adds.

Federal Register notice