[Federal Register Volume 84, Number 249 (Monday, December 30, 2019)]
[Notices]
[Pages 72137-72138]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-28037]
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DEPARTMENT OF THE TREASURY
Financial Crimes Enforcement Network
Agency Information Collection Activities; Proposed Renewal;
Comment Request; Renewal Without Change of the Beneficial Ownership
Requirements for Legal Entity Customers
AGENCY: Financial Crimes Enforcement Network (``FinCEN''), Treasury.
ACTION: Notice and request for comments.
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SUMMARY: As part of its continuing effort to reduce paperwork and
respondent burden, FinCEN invites comment on the proposed renewal,
without change, to a currently approved information collection relating
to beneficial ownership requirements for legal entity customers of
covered financial institutions. Under Bank Secrecy Act regulations,
covered financial institutions are required to collect, and to maintain
records of, the information used to identify and verify the identity of
the names of the beneficial owners of their legal entity customers,
subject to certain exclusions and exemptions. This request for comment
is made pursuant to the Paperwork Reduction Act of 1995.
DATES: Written comments are welcome and must be received on or before
February 28, 2020.
ADDRESSES: Comments may be submitted by any of the following methods:
Federal E-rulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments. Refer to Docket Number
FINCEN-2019-0007 and the specific Office of Management and Budget
(``OMB'') control number 1506-0070.
Mail: Policy Division, Financial Crimes Enforcement
Network, P.O. Box 39, Vienna, VA 22183. Refer to Docket Number FINCEN-
2019-0007 and OMB control number 1506-0070.
Please submit comments by one method only. Comments will also be
incorporated into FinCEN's retrospective regulatory review process, as
mandated by Executive Orders 12866 and 13563. All comments submitted in
response to this notice will become a matter of public record.
Therefore, you should submit only information that you wish to make
publicly available.
FOR FURTHER INFORMATION CONTACT: The FinCEN Resource Center at 1-800-
767-2825 or electronically at [email protected].
SUPPLEMENTARY INFORMATION:
I. Statutory and Regulatory Provisions
FinCEN exercises regulatory functions primarily under the Currency
and Financial Transactions Reporting Act of 1970, as amended by the USA
PATRIOT Act of 2001 and other legislation. This legislative framework
is commonly referred to as the ``Bank Secrecy Act'' (``BSA'').\1\ The
Secretary of the Treasury has delegated to the Director of FinCEN the
authority to implement, administer, and enforce compliance with the BSA
and associated regulations.\2\ Pursuant to this authority, FinCEN may
issue regulations requiring financial institutions to keep records and
file reports that ``have a high degree of usefulness in criminal, tax,
or regulatory investigations or proceedings, or in the conduct of
intelligence or counterintelligence activities, including analysis, to
protect against international terrorism.'' \3\ Additionally, FinCEN is
authorized to impose regulations to maintain procedures to ensure
compliance with the BSA and FinCEN's implementing regulations, and to
guard against money laundering, which includes imposing on financial
institutions customer due diligence requirements within the anti-money
laundering (``AML'') program requirements.\4\
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\1\ The BSA is codified at 12 U.S.C. 1829b, 12 U.S.C. 1951-1959,
31 U.S.C. 5311-5314 and 5316-5332 and notes thereto, with
implementing regulations at 31 CFR Chapter X. See 31 CFR
1010.100(e).
\2\ Treasury Order 180-01 (Jul. 1, 2014).
\3\ 31 U.S.C. 5311.
\4\ 31 U.S.C. 5318(a) and (h).
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Under 31 CFR 1010.230 covered financial institutions \5\ are
required to establish and maintain written procedures that are
reasonably designed to identify and verify beneficial owners of new
accounts opened by legal entity customers and to include such
procedures in their AML programs. Covered financial institutions may
obtain the required identifying information by either obtaining a
prescribed certification form from the individual opening the account
on behalf of a legal entity customer, or by obtaining from the
individual the information required by the form by another means,
provided the individual certifies the accuracy of the information.
Covered financial institutions must also maintain a record of the
identifying information obtained, and a description of any document
relied on, of any non-documentary methods and results of any measures
undertaken, and the resolutions of substantive discrepancies.
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\5\ Covered financial institutions include banks, brokers or
dealers in securities, mutual funds, and futures commission
merchants and introducing brokers in commodities. See 31 CFR
1010.230(f) and 31 CFR 1010.605(e)(1).
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These requirements will assist law enforcement in financial
investigations, advance counterterrorism and broader national security
interests, improve financial institutions' ability to assess and
mitigate risk, help prevent evasion of targeted financial sanctions,
facilitate tax compliance, enhance financial transparency of legal
entities, and advance U.S. compliance with international standards and
commitments.
II. Paperwork Reduction Act (``PRA'') \6\
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\6\ Public Law 104-13, 44 U.S.C. 3506(c)(2)(A).
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Title: 31 CFR 1010.230--Beneficial Ownership Requirements for Legal
Entity Customers.
OMB Control Number: 1506-0070. Form Number: Appendix A to Sec.
1010.230--Certification Regarding Beneficial Owners of Legal Entity
Customers.
Abstract: FinCEN is issuing this notice to renew the OMB control
number for the regulations contained in 31 CFR 1010.230 that require
covered financial institutions to collect, and to maintain records of,
the information used to identify and verify the identity of the names
of the beneficial owners of their legal entity customers.
Type of Review: Renewal without change of a currently approved
information collection.
Affected Public: Business and other for-profit institutions and
non-profit institutions.
Frequency: As required.
Burden:
a. Update and maintain beneficial ownership identification
procedures: 20 minutes.\7\
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\7\ The final rule recognized a burden of 56 hours to develop
the initial procedures (40 hours for small entities). (See 81 FR
29398, May 11, 2016). Once procedures are developed, an annual
burden of 20 minutes is recognized for revisions to and maintenance
of such procedures. Covered financial institutions were required to
comply with this rule by May 11, 2018, so no burden hours are
included in this analysis for the initial development of procedure.
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b. Customer identification, verification, and review and
recordkeeping of the beneficial ownership information: A range of 20 to
40 minutes per legal entity customer (an average of 30 minutes per
legal entity customer).
[[Page 72138]]
Estimated Number of Respondents: 23,615.\8\
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\8\ The above Estimated Number of Respondents is based on sum of
the following numbers:
5,358 banks [Federal Deposit Insurance Corporation, Key
Statistics web page, April 25, 2019];
5,375 federally-insured credit unions [National Credit
Union Administration, Quarterly Credit Union Data Summary, December
31, 2018];
125 privately-insured credit unions [General
Accountability Office, PRIVATE DEPOSIT INUSRANCE: Credit Unions
Largely Complied with Disclosure Rules, but Rules Should Be
Clarified, March 2017];
1,130 introducing brokers [National Futures Association
website, March 31, 2019];
64 futures commission merchants [National Futures
Association website, March 31, 2019];
3,607 securities firms [Financial Industry Regulatory
Authority website, December 31, 2018]; and,
7,956 U.S. mutual funds [Investment Company Institute,
2018 Factbook, 2018].
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Estimated Total Annual Responses: 8,855,625.\9\
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\9\ Based on research conducted to publish the final rule in
2016, it is estimated that each covered financial institution will
open, on average, 1.5 new legal entity accounts per business day.
There are 250 business days per year. (23,615 financial institutions
x 1.5 accounts per day x 250 business days per year = 8,855,625 new
legal entity accounts opened per year).
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Estimated Recordkeeping Burden: 4,435,685 hours.\10\
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\10\ 8,855,625 new legal entity accounts x 30 minutes per
account established / 60 minutes per hour = 4,427,813 burden hours
to identify and verify beneficial owners of new legal entity
accounts per year. 20 minutes to update and maintain beneficial
ownership identification and verification procedures within a
financial institution's AML program multiplied by 23,615 covered
financial institutions and divided by 60 minutes = 7,872 burden
hours annually. The total annual burden hours estimate for this
information collection is (4,427,813 + 7,872) 4,435,685.
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An agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information unless it displays a valid
control number assigned by OMB. Records required to be retained under
the BSA must be retained for five years. Generally, information
collected pursuant to the BSA is confidential but may be shared as
provided by law with regulatory and law enforcement authorities.
Request for Comments:
Comments submitted in response to this notice will be summarized
and/or included in the request for OMB approval. All comments will
become a matter of public record. Comments are invited on: (a) Whether
the collection of information is necessary for the proper performance
of the functions of the agency, including whether the information shall
have practical utility; (b) the accuracy of the agency's estimate of
the burden of the collection of information; (c) ways to enhance the
quality, utility, and clarity of the information to be collected; (d)
ways to minimize the burden of the collection of information on
respondents, including through the use of automated collection
techniques or other forms of information technology; and (e) estimates
of capital or start-up costs and costs of operation, maintenance and
purchase of services to provide information.
Jamal El Hindi,
Deputy Director, Financial Crimes Enforcement Network.
[FR Doc. 2019-28037 Filed 12-27-19; 8:45 am]
BILLING CODE 4810-02-P