FR 2025-05349

Summary of the Document

The document is a notice from the Financial Crimes Enforcement Network (FinCEN), part of the U.S. Treasury Department. It outlines a proposal to renew a rule that enforces information collection requirements on U.S. banks. Specifically, it focuses on monitoring relationships with foreign banks connected to Iranian financial institutions or individuals associated with the Islamic Revolutionary Guard Corps (IRGC). The ultimate goal of this rule is to combat money laundering and terrorism financing. This notice invites public comments, highlighting efforts to balance regulatory enforcement with minimizing paperwork and burdens on banks.

Significant Issues or Concerns

One major concern with this document is its use of complex legal and technical language, which can be challenging for readers without a background in financial regulation. This complexity may hinder public understanding and engagement during the comment period. The document also includes numerous references to legal codes and footnotes, which can further complicate comprehension of its main points and implications.

The methodology for estimating the regulatory burden on banks involves several assumptions about the number of reports expected from banks with and without correspondent accounts. This could result in inaccurate estimates, especially since the calculations rely heavily on past data without accounting for potential future changes or geopolitical developments. Additionally, the costs related to foreign banks are not clearly broken out, possibly underestimating the real financial impact.

Impact on the Public

Broadly, this document may affect the general public through its role in safeguarding against money laundering and terrorism financing. If successfully implemented, the rule could contribute to national and international security, though the complexities of the document may dampen public participation in the comment process.

Impact on Specific Stakeholders

For U.S. banks, the renewal of these regulations could mean continued compliance costs and operational burdens. However, the emphasis on preventing illicit financial activities may also align with the wider anti-money laundering efforts already undertaken by many institutions. Foreign banks identified in FinCEN's requests could face additional scrutiny, possibly affecting their business operations with U.S. banks.

In contrast, regulatory bodies may view this document positively as a reinforcement of existing frameworks critical to national security. It serves as an instrument to ensure that efforts to curb financial crimes remain rigorous and adaptive to evolving risks.

Overall, while the intent of the document is clear in its focus on compliance and security, the execution requires careful attention to avoid imposing disproportionate burdens on compliant financial institutions and to ensure that all relevant parties are accounted for in burden assessments.

The document outlines the financial implications of certain information collection requirements under the Bank Secrecy Act (BSA) regulations. These refer to the obligations of U.S. banks when interacting with foreign banks linked to Iranian financial institutions and the Islamic Revolutionary Guard Corps (IRGC).

Financial Burden and Cost Estimates

The document details the estimated costs that U.S. banks might incur while complying with these regulations. The estimated total annual recordkeeping and reporting cost is $18,720. This figure is derived from the labor hours required to respond to the CISADA Requests, which total 156 hours annually.

This cost is based on a composite hourly wage rate of approximately $120.00. This rate includes both wages and additional benefits provided to the employees involved in complying with these regulations.

These financial burdens are calculated under the assumption that a maximum of 24 U.S. banks may potentially be affected by the CISADA Requests each year. This estimate is considered conservative, likely reflecting past experiences where relatively few banks have been required to respond to such requests.

Details on Reporting Requirements

Each CISADA Request may lead to multiple reports, given that one request can pertain to more than one foreign bank. An estimated 72 CISADA Reports are expected to be submitted annually by the affected U.S. banks.

The reporting requirements when a U.S. bank maintains a correspondent account with the specified foreign bank are heavier than when it does not. For banks that have correspondent accounts, each report is estimated to take approximately three hours to prepare. Meanwhile, if no correspondent account is maintained, the task is estimated to take about 30 minutes. This helps to distinguish the variable financial burdens imposed depending on the U.S. banks' pre-existing relationships with foreign banks.

Analysis of Financial Assumptions

The document makes several assumptions in estimating the financial burden, including the frequency of these requests and the allocation of reports between U.S. banks with existing foreign banking relationships and those without. These estimations leverage past data but may underestimate future financial burdens due to potential changes in geopolitical contexts which affect international banking regulations.

Furthermore, the estimation methods do not include costs that might be borne by affected foreign banks, which could lead to an underestimation of the total financial burden involved in complying with the regulation. The omission of these costs highlights a potential gap in the comprehensive assessment of financial implications.

In summary, while the document provides a structured approach to estimating financial burdens, it relies heavily on historical data and specific assumptions that may not capture all future scenarios comprehensively. The absence of burdens on foreign banks in the calculation further nuances the evaluations presented.