The banking industry has been sharply critical of the Financial Crimes Enforcement Network’s (“FinCEN”) proposed rules (the “Proposed Rules”) to broaden the reporting obligations of banks and money transmitters for cross-border electronic transmittals of funds (“CBETFs”). Comment letters from the industry have attacked the proposal on various grounds, including that the Proposed Rules are overbroad and that FinCEN is not technologically prepared to utilize the data which would be provided by banks under the Proposed Rules.
Under the Proposed Rules, which were described in the October 5, 2010 Alert, certain banks would be required to furnish FinCEN with (1) copies of transmittal orders or advices (or equivalent information in a format to be developed by FinCEN) for CBETFs sent to or received from foreign financial institutions and (2) an annual report that provides the account numbers for accounts that transmitted or received a CBETF and the U.S. taxpayer identification numbers for the corresponding accountholders. The Proposed Rules would also require certain money transmitters to submit reports regarding CBETFs of $1,000 or more sent to or received from foreign financial institutions.
The banking industry’s main criticism of the Proposed Rules is that requirements for annual reporting of taxpayer identification information for accountholders engaged in cross-border electronic transfers are an unnecessary invasion of privacy that would not collect useful information. In addition, the industry commented that the Proposed Rules would require banks to submit a large volume of reports, but that the information would not provide FinCEN with more meaningful data than it could collect through more limited reporting requirements. Industry commenters also pointed to the fact that FinCEN exceeds current FinCEN data management capabilities and fails to impose adequate standards on law enforcement for data use accountability or security. Other commenters stated their views that the Proposed Rules exceed the limited rulemaking authority provided to FinCEN by Congress in Intelligence Reform and Terrorism Prevention Act of 2004 by imposing overly broad reporting requirements. The Alert will continue to monitor developments regarding the Proposed Rules.