The record-keeping rule and the travel rule jointly require banks and non-bank financial institutions to collect, retain and transfer information about money transfers and money transfers of $3,000 or more. Also in 1995, the U.S. Department of the Treasury issued a final rule requiring all financial institutions to include certain information in transfer orders for money transfers of $3,000 or more (31 CFR 1010,410). 114The rule applies to both banks and non-banks [31 CFR 1010.410(f)]. Because it is a broader scope, the travel rule uses broader terms. B s, e.g. “transfer order” instead of “payment order” and “issuer`s financial institution” instead of “home bank”. Broader terms include bank-specific terms. This requirement is commonly referred to as the “travel rule”.
The second element of the NPRM would result in money transfers with convertible virtual currency (CVC) and other digital assets being subject to the record-keeping and travel rule. CVC, better known as cryptocurrency or cryptocurrency, is a medium of exchange with equivalent value in currency or acts as a substitute for currency, but does not currently fall within the regulatory definition of “currency” (also known as legal tender). Information available to the agencies suggests that malicious actors are using lower-value cross-border remittances to facilitate or commit terrorist financing, drug trafficking and other illegal activities, and that increased accounting and reporting of these transactions would be valuable for printed page 68008public prosecution and national security authorities. In particular, with the proposal to lower the current threshold under the Record Keeping and Travel Regulations, the agencies have taken into account suspicious activity reports (“SARs”) submitted by money transmitters, indicating that a significant volume of potentially illegal money transfers and money transfers are taking place below the $3,000 threshold. evidence used in recent prosecutions; and the views of law enforcement partners and the Financial Action Task Force (FATF)  on the benefits of mandating the collection of information for lower-value transfers. This article begins with an overview of the basics of the FinCEN travel rule and why anti-money laundering compliance is so important. It is followed by an “in-depth overview” of the nuances of compliance with the travel rule, including a discussion of upcoming changes to the travel rule in an October 2020 communication on the proposed rule development; Fedwire`s requirements in relation to travel rules; aggregate money transfers; problems with the author`s name; and non-customer transfers. For institutions that meet the minimum reporting threshold, the new lower cross-border threshold poses operational and programmatic challenges. The distinction between a cross-border transaction and a domestic transaction is not always clear. For example, if a financial institution does not have direct relationships with foreign correspondent banks, its cross-border money transfers must go through a U.S.
intermediary and therefore through the Federal Reserve. Automated systems can interpret these transactions as domestic, since the first beneficiary institution will always be based in the United States. Description of Recorders: Banks that are the initiator`s bank, intermediary bank or recipient`s bank with respect to transfers of funds between $250 and $3,000 that begin or end outside the United States. Objective. Assess the bank`s compliance with legal and regulatory requirements for money transfers. This section discusses the regulatory requirements set out in the BSA. In the extensive sections of this guide, you will find discussions and procedures on the specific risks of money laundering for money transfer activities. Countries should ensure that financial institutions take freezing measures with respect to the processing of remittances and the execution of transactions with designated persons and entities, in accordance with their obligations under relevant United Nations Security Council resolutions, such as resolution 1267 (1999) and its successors, and resolution 1373 (2001) on preventing and combating terrorism and the financing of terrorism, prohibit. (b) transfers and settlements from financial institutions to financial institutions where the payer and the payee are financial institutions acting on their own behalf. Below is a basic representation of a money transfer.
A principal creates a payment order to pay money to a specific beneficiary. The payer hands over the payment order to his bank, which then forwards the details of the payment order to the bank that holds the payee`s account. The transfer is made when the beneficiary`s bank accepts the payment order on behalf of the beneficiary. Q16: What are the examples of remittances that are not transfers? In January 1995, the Board of Governors of the Federal Reserve and FinCEN jointly issued a rule for banks and other non-bank financial institutions regarding the information that must be included in money transfers. The rule consists of two parts – the check-in rule and what has become known as the travel rule. The travel rule was promoted by FinCEN in accordance with its mandate to enforce the Banking Secrecy Act. If the person issuing the payment order is not the principal, the financial institution must record the name, address and tax number of that person (or another alternative described above) or be aware of the absence of such a person […].