Letter backs changes to BSA recordkeeping, travel rule regs

(Dec. 4, 2020) NASCUS supports making some changes to recordkeeping and travel rule regulations under rules implementing the Bank Secrecy Act (BSA) to promote calibrating the value of anti-money laundering measures with operational, compliance and expense considerations of credit unions and other institutions, NASCUS wrote in a comment letter filed Nov. 27.

In a letter to the Federal Reserve Board, NASCUS responded to a joint request for comments from the Fed and the Financial Crimes Enforcement Network (FinCEN). When the comment request was issued Oct. 23, the two agencies said they were issuing the portion of the rule concerning recordkeeping jointly because of their shared authority; the portion on travel was issued singly by FinCEN as it has sole authority over that area.

Under current rules, financial institutions must collect, retain, and transmit certain information related to funds transfers and transmittals of funds greater than $3,000, the agencies stated. Under the proposal, the applicable threshold for international transactions would drop to $250; the threshold for domestic transactions would remain the same ($3,000).

NASCUS, in its letter, wrote that lowering the threshold for fund transmittals beginning or ending outside of the U.S. will come with a cost for credit unions and other financial institutions. “For some institutions, the increased data storage requirements of capturing and preserving required information could be a significant burden, particularly as credit unions manage the economic dislocation resulting from the ongoing pandemic,” NASCUS wrote.

The association stated that the agencies should also consider that while the lower threshold applies only to transactions beginning or ending outside of the United States, for many institutions the best practice is to set data collection policies to the “lowest requirement” to ensure consistent compliance. The agencies’s proposal, NASCUS wrote, “would result in the capture and retention of significant amounts of data even for those credit unions doing only infrequent international funds transmittals,” NASCUS wrote.

In other comments, NASCUS also:

  • Wrote that it supports including a specific standard for “reason to know” in the rule to mitigate the potential for confusion and uncertainty as to the standard to be met. “We would also recommend clear guidance on the obligations of all financial institutions in the chain of a funds transmission with respect to identifying cross-border transactions and compliance with the final rules,” NASCUS wrote. Under the proposal, funds transfer or transmittal of funds would be considered to begin or end outside the U.S. if a financial institution knows or has reason to know that the transmittor, transmittor’s financial institution, recipient, or recipient’s financial institution is located in, is ordinarily resident in, or is organized under the laws of a jurisdiction other than the United States or a jurisdiction within the United States.
  • Urged FinCEN to continue to evaluate the BSA framework to eliminate redundant monitoring, reporting or recordkeeping requirements. “Reducing compliance burden in ‘other’ areas of the BSA would allow credit unions to reallocate resources to those areas where enhanced diligence, or more granular reporting might be needed by law enforcement,” NASCUS wrote.

NASCUS comment: Threshold for collecting and retaining information on certain funds transfers and transmittal of funds