Comment: Proposed changes to Bank Secrecy Act (BSA) threshold for collecting, retaining information on certain funds transfers, transmittal of funds

November 28, 2020

Ann E. Misback
Board of Governors of the Federal Reserve System
20th Street and Constitution Avenue NW
Washington, DC 20551.

Re: NASCUS Comments on Docket N0 R-1726 and RIN 7100 – AF97

Secretary Misback:

The National Association of State Credit Union Supervisors (NASCUS)[1] submits the following letter in response the request for comments by the Board of Governors of the Federal Reserve System and the Financial Crimes Enforcement Network (the Agencies) regarding Docket N0 R-1726 and RIN 7100 – AF97: proposed changes to the Bank Secrecy Act (BSA) threshold for collecting and retaining information on certain funds transfers and transmittal of funds.[2] NASCUS, state credit union regulators, and credit union system stakeholders are committed to safeguarding the financial system and the nation and to fulfilling their responsibilities under the BSA. We thank the Agencies for the opportunity to provide feedback on the proposed changes to these rules.

We appreciate the benefit to authorities of lowering the thresholds of the Recordkeeping Rule and the Travel Rule to identify lower dollar cross-border transactions intended to support illicit activities. Furthermore, we understand the risks posed by illicit use of convertible virtual currency (CVC) and the recommendations of the Financial Action Task Force (FATF).[3] NASCUS supports effective BSA/AML/CFT rules that calibrate anti-money laundering value with the operational and compliance burden, and expense, to covered institutions.

Credit unions are governed by their member account holders. Members of credit unions share common bonds, and credit unions provide banking services predominantly only to these members. For these reasons, credit unions often have a deeper understanding of their member/customers and the ability to identify unusual transaction activity even in micro transactions. As we have noted to FinCEN in the past, the Suspicious Activity Report (SAR) is a means by which many illicit transactions can be identified and reported regardless of the various regulatory thresholds. We continue to believe emphasizing suspicious activity reporting is a more effective alternative to expanded reporting thresholds.[4]

Proposed Threshold for Transmittal of Funds that Begin or End Outside of the United States

Lowering the threshold for fund transmittals beginning or ending outside of the United States will not be without cost for 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. 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. This would result in the capture and retention of significant amounts of data even for those credit unions doing only infrequent international funds transmittals.

The Agencies specifically requested comments on whether to include the definition of “reason to know” as prescribed in the Supplemental Material Section IV.A.[5] NASCUS 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.

The Agencies also ask for comments on whether some entities should be exempted from collecting a social security number or taxpayer identification number from non-established non-bank customers.[6] It would seem to be effective the rule should apply equally across entities. Without further information as to how such an exemption would not diminish the effect of the rule, and the burden upon depositories, we cannot endorse limiting coverage of the proposed changes in such a manner.

Definition of Money

The Agencies proposed extending the Recordkeeping Rule and Travel Rule to cover CVC and certain digital assets.[7] NASCUS recognizes that non-fiat currencies present a unique risk for abuse by illicit actors. Of course, CVC by their very nature can be an amorphous concept and one with which many credit unions may not be entirely familiar. Should the Agencies move to finalize the provision of the proposal, industry will need guidance in identifying covered transactions.

A Holistic View of the BSA

Lowering the Recordkeeping Rule and Travel Rule threshold for certain transactions will increase the compliance burden for credit unions. While the added burden would be manageable, we urge 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.

We thank the Agencies for the opportunity to provide input and feedback on this proposal. The state credit union system remains committed to combating money laundering and preventing the financing of terrorism. NASCUS encourages the Agencies to continue dialogue with stakeholders to meaningfully balance regulation to maximize usefulness to law enforcement while prudently reducing compliance burden for institutions of all sizes.


– signature redacted for electronic publication –

Brian Knight
Executive Vice President & General Counsel

[1] NASCUS is the professional association of the nation’s 45 state credit union regulatory agencies that charter and supervise over 2,000 state credit unions. NASCUS membership includes state regulatory agencies, state chartered and federally chartered credit unions, and other important stakeholders in the state system. State chartered credit unions hold half the $1.77 trillion assets in the credit union system and are proud to represent nearly half of the 124 million credit union members.

[2] “Threshold for the Requirement To Collect, Retain, and Transmit Information on Funds Transfers and Transmittals of Funds That Begin or End Outside the United States, and Clarification of the Requirement To Collect, Retain, and Transmit Information on Transactions Involving Convertible Virtual Currencies and Digital Assets With Legal Tender Status,” 85 Fed. Reg. 68005 (October 27, 2020).

[3] See FATF Recommendation 15, Interpretive Note, “International Standards on Combating Money Laundering and the Financing of Terrorism & Proliferation” (Updated October 2020). Available at

[4] See NASCUS comments to FinCEN regarding the Currency Transaction Report threshold. Available at

[5] 85 Fed. Reg. 68012 (October 27, 2020).

[6] Ibid.

[7] 85 Fed. Reg. 68011 (October 27, 2020).