Overview
Title
Agency Information Collection Activities; Proposed Renewal; Comment Request; Renewal Without Change of Purchases of Bank Checks and Drafts, Cashier's Checks, Money Orders, and Traveler's Checks
Agencies
ELI5 AI
The government wants to keep track of when people buy special types of checks and orders with money, and they're asking for ideas on how to do it better. They aren't changing the rules but want to know how long it takes and how much it costs for banks to follow these rules.
Summary AI
The Financial Crimes Enforcement Network (FinCEN), part of the U.S. Treasury Department, is seeking comments on renewing a rule about recordkeeping for certain financial transactions. The rule mandates financial institutions to keep records of purchases of items like bank checks and money orders when bought with cash amounts ranging from $3,000 to $10,000. FinCEN is not proposing any changes to the rule itself but wants feedback on improving the process to estimate time and costs for financial institutions to comply with these requirements. Public comments are invited by March 22, 2021, and will help FinCEN refine their data collection and reduce paperwork burdens.
Abstract
As part of its continuing effort to reduce paperwork and respondent burden, FinCEN invites comments on the proposed renewal, without change, of a currently approved information collection found in existing Bank Secrecy Act regulations. Specifically, the regulations require recordkeeping for the issuance or sale of bank checks and drafts, cashier's checks, money orders, and traveler's checks when the issuance or sale involves the use of currency in an amount between $3,000 and $10,000, inclusive. Although no changes are proposed to the information collection itself, this request for comments covers a future expansion of the scope of the annual hourly burden and cost estimate associated with these regulations. This request for comments is made pursuant to the Paperwork Reduction Act of 1995.
Keywords AI
Sources
AnalysisAI
The document from the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Treasury Department, outlines a proposal for renewing a regulatory requirement. This requirement obligates financial institutions to maintain records when issuing or selling financial instruments such as bank checks, drafts, cashier's checks, money orders, and traveler's checks, specifically when these transactions involve cash amounts between $3,000 and $10,000. While no changes to the rule itself are currently proposed, FinCEN is seeking public feedback on how to enhance their process for estimating the time and costs associated with compliance. The feedback is intended to refine data collection methods and reduce the paperwork burden on financial institutions.
General Summary
FinCEN's notice is part of an ongoing initiative to streamline regulatory processes and minimize unnecessary burdens on entities governed by the Bank Secrecy Act (BSA). The goal is to ensure financial institutions maintain records that are essential for legal and regulatory compliance without excessive administrative strain. By soliciting comments, FinCEN aims to improve its understanding of the practical effects these requirements have on businesses and to refine its estimations of the associated costs and time commitments required for compliance.
Significant Issues or Concerns
The document is written in a complex and technical manner that could be challenging for the general public to understand. Detailed statutory references and elaborate descriptions of regulatory provisions might obscure the core purpose and implications of the requirements for those unfamiliar with such language.
Additionally, the estimates of costs and burdens associated with compliance are articulated using specialized terminology and calculations. Providing simpler explanations or relatable examples could facilitate broader comprehension and meaningful feedback from stakeholders.
There are concerns about potential additional costs or requirements potentially imposed on smaller financial institutions, which are not explicitly addressed. Simplifying and clarifying these aspects would help in assessing the real-world impact on these organizations.
The reliance on past estimates for future projections without reassessment may lead to inaccuracies in understanding the true burden or cost. This might reflect inefficiencies or a lack of due diligence in updating methodologies to account for evolving financial environments or technological advancements. Moreover, using self-reported data from Money Services Businesses (MSBs) without mention of cross-verification processes could compromise data quality, raising questions about the report's accuracy and reliability.
Impact on the Public Broadly
For the general public, the document signifies an ongoing bureaucratic effort to balance regulatory oversight with operational efficiency in the financial sector. Effective recordkeeping can deter financial crimes, such as money laundering, benefiting society by enhancing public security. However, convoluted regulatory requirements might indirectly affect consumers, as financial institutions could pass down any associated compliance costs through fees or service alterations.
Impact on Specific Stakeholders
Financial Institutions: The regulatory expectation to maintain comprehensive transaction records places a significant administrative burden on financial entities, especially smaller firms with limited resources. These institutions might face challenges in aligning existing systems with regulatory expectations without incurring substantial costs. Larger firms with robust compliance departments might manage this more smoothly.
Regulatory Bodies: For FinCEN and other regulatory bodies, the task is to enforce compliance while simultaneously minimizing the reporting burden. Clear and accurate data are crucial for effective oversight, and the initiative to solicit comments is a step toward improving data collection methods.
General Public and Commenting Stakeholders: While the opportunity to comment creates room for public engagement, it might be underutilized unless accompanied by specific guidance on feedback provision. Ensuring comments are meaningful and constructive requires clarity about what kinds of input will influence subsequent actions or revisions.
In summary, while FinCEN's approach aligns with its commitment to regulatory simplification, thoughtful consideration of the broader implications, as well as the challenges faced by those required to comply, is crucial. Addressing these concerns through clearer communication and more detailed guidance could enhance overall efficacy and stakeholder satisfaction.
Financial Assessment
The document outlines proposed regulations requiring financial institutions to keep detailed records when issuing or selling certain financial instruments, such as bank checks, cashier's checks, money orders, and traveler's checks, within specific monetary thresholds. These records must be maintained when transactions involve currency between $3,000 and $10,000, inclusive. The Financial Crimes Enforcement Network (FinCEN) seeks to renew, without change, these existing information collection requirements.
Summary of Financial References
In terms of financial allocations, the document estimates the annual labor burden for financial institutions related to gathering and maintaining these records. Specifically, it projects that maintaining records for transactions involving these financial instruments will require a total of 117,579 burden hours across 15,677 financial institutions. The estimated cost linked to this burden amounts to $3,880,107 annually. This figure accounts for the time institutions must dedicate to compliance activities like verifying customer identities and recording transactional details, which are essential for meeting Bank Secrecy Act requirements.
Financial References and Identified Issues
One concern that stems from these financial references is the potential impact on financial institutions, especially smaller entities. Although the document provides an estimated total cost, it may be beneficial to offer more explicit explanations or simplified examples to help institutions, particularly those with fewer resources, understand the financial implications they face. This aligns with the identified issue that the cost and burdens are expressed in potentially complex terms, which might not be fully transparent to the average reader.
Another issue tied to financial references is the document's assumption of a "traditional annual PRA burden." It relies on past estimates without precise reassessment using more accurate tools or methodologies. This brings up concerns about the accuracy and efficiency of the cost and burden projections for financial institutions, suggesting that the estimates might not reflect either current practices or the potential variability across different types of financial institutions.
The future costs and burdens could also change based on public commentary, and therefore, the call for comments in the document could benefit from more specific guidance to facilitate meaningful stakeholder participation. Improved feedback might enhance the accuracy of future financial burden estimations, ensuring that they more precisely reflect the requirements placed on financial institutions.
In conclusion, while the document provides a financial framework for regulatory compliance, clarity and transparency around these financial figures and their implications on smaller financial institutions could be improved to address the concerns presented.
Issues
• The language used in the document is overly complex, especially in the sections detailing statutory and regulatory provisions. This may make it difficult for the general public to understand the requirements and implications.
• The estimated costs and burdens are expressed in terms that might not be fully transparent to the average reader. It would be beneficial to provide simpler explanations or examples.
• The document does not clearly state whether there will be any additional costs incurred by financial institutions to comply with the recordkeeping requirements, which could be a concern for small institutions.
• The document assumes a 'traditional annual PRA burden' but does not sufficiently explain why this burden has not been reassessed with more precise tools, which might lead to concerns about accuracy.
• There is reliance on self-reported data from the MSB registrations, which can be inaccurate, yet there is no mention of cross-verification methods to ensure data quality.
• The document discusses future plans to conduct more granular studies but lacks a clear timeline or methodology for when and how these studies will be conducted, which could leave stakeholders uncertain.
• The document mentions potential duplicate burdens for banks in connection with customer identification programs but does not clearly outline how these issues will be remedied or accounted for.
• The reliance on past estimates for projecting future burdens without a comprehensive explanation of data validation might be seen as potentially wasteful or inefficient.
• The call for public comments could benefit from more specific guidance to encourage meaningful participation from stakeholders, potentially improving data collection and decision-making.