The Treasury Department today announced a new bank reporting rule designed to both significantly reduce unnecessary paperwork for America's banks and improve the quality of information routinely provided to law enforcement.
The new rule will go into effect May 1, 1996, changing the previous requirement for banks to file forms reporting every currency transaction in excess of $10,000. Such transactions will no longer need to be reported if they involve the following:
- Another bank in the United States.
- Any federal, state or local government (including the District of Columbia, U.S. territories and possessions, and various tribal government authorities).
- Any listed corporation whose stock is traded on the New York Stock Exchange, the American Stock Exchange (excluding stock listed on the Emerging Company Marketplace of the American Stock Exchange), is designated as a Nasdaq National Market Security listed on the Nasdaq Stock Market (excluding stock issued under the separate Nasdaq Small-Cap Issues heading), and any consolidated subsidiary of a listed corporation that files combined federal income tax returns.
By exempting these entities from routine reporting, Treasury estimated that banks will be required to file 2 million fewer forms in the first year alone, amounting approximately to a 20 percent reduction. However, the new rule will continue to require that all apparently suspicious currency transactions -- even those of newly exempted entities -- be reported according to rules issued earlier this year. These reports are used by law enforcement for criminal investigations.
"This streamlined reporting system has resulted from Treasury's firm commitment to constructive cooperation among the financial, regulatory and enforcement communities," said Treasury Secretary Robert Rubin. "It will provide law enforcement with a more focused stream of quality information and allow out financial institutions to operate more efficiently."
The new rule is issued by Treasury's Financial Crimes Enforcement Network (FinCEN) under the Bank Secrecy Act (BSA). The BSA authorizes reporting requirements and is a key component of the Treasury's effort to fight financial crimes such as money laundering, bank fraud and tax evasion.
Information provided by transaction reports is vital to investigators, but reporting requirements had been criticized by banks because they mandated repetitive paperwork for the routine transactions of legitimate cash intensive businesses and governments. Banks will now be able to make a one-time filing of the standard transaction report form simple to designate an exempted entity. An exemption may be revoked by Treasury with notice at any time.
"This rule is a major step in our continued efforts to eliminate from the system reports of little or no value to law enforcement," said FinCEN Director Stanley Morris. "This improvement will enable banks to concentrate resources where they will do the most good, quickly reporting suspicious activity to law enforcement authorities."
Once the new rule goes into effect, it will be considered on an interim basis for 90 days during which all interested parties are invited to offer comments. Following the 90-day comment period, FinCEN will prepare a final rule. The interim rule was sent to the Federal Register today and will be published soon.
Updated November 21, 1996