Financial Crimes Enforcement Network; Anti-Money Laundering Programs for Unregistered Investment Companies

AGENCY:

Financial Crimes Enforcement Network (FinCEN), Treasury.

ACTION:

Notice of proposed rulemaking.

SUMMARY:

FinCEN is proposing to amend the Bank Secrecy Act (“BSA”) regulations to prescribe minimum standards applicable to certain unregistered investment companies, such as hedge funds, commodity pools, and similar investment vehicles, pursuant to the revised provision in the BSA that requires financial institutions to establish anti-money laundering programs.

DATES:

Written comments on all aspects of the proposal are welcome and must be received on or before November 25, 2002.

ADDRESSES:

Because paper mail in the Washington area may be subject to delay, commenters are encouraged to e-mail comments. Comments should be sent by one method only. Comments (preferably an original and four copies) may be mailed to: FinCEN, PO Box 39, Vienna, Virginia 22183-1618, Attention: NPRM—Section 352 Unregistered Investment Company Regulations. Comments also may be submitted by electronic mail to the following Internet address: regcomments@fincen.treas.gov, again with a caption, in the body of the text, “Attention: NPRM—Section 352 Unregistered Investment Company Regulations.” Comments may be inspected, between 10 a.m. and 4 p.m., in the FinCEN reading room in Washington, DC. Persons wishing to inspect the comments submitted must request an appointment by telephoning (202) 354-6400 (not a toll-free number).

FOR FURTHER INFORMATION CONTACT:

Office of the Assistant General Counsel for Banking & Finance (Treasury), (202) 622-0480; Office of the Assistant General Counsel for Enforcement (Treasury), (202) 622-1927; or Office of Chief Counsel (FinCEN), (703) 905-3590 (not toll-free numbers).

SUPPLEMENTARY INFORMATION:

I. Background

On October 26, 2001, the President signed into law the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Public Law 107-56) (“USA Patriot Act” or “Act”). Title III of the Act makes a number of amendments to the anti-money laundering provisions of the BSA, which are codified in subchapter II of chapter 53 of title 31, United States Code. These amendments are intended to promote the prevention, detection, and prosecution of international money laundering and the financing of terrorism. Section 352(a) of the Act, which became effective on April 24, 2002, amended section 5318(h) of the BSA. As amended, section 5318(h)(1) requires every “financial institution” to establish an anti-money laundering program that includes, at a minimum (i) the development of internal policies, procedures, and controls; (ii) the designation of a compliance officer; (iii) an ongoing employee training program; and (iv) an independent audit function to test the program. Section 5318(h)(2) authorizes the Secretary, after consulting with the appropriate Federal functional regulator, to prescribe minimum standards for anti-money laundering programs, and to exempt from the application of those standards any financial institution that is not otherwise subject to BSA regulation.

Under the BSA, the definition of “financial institution” includes an “investment company,” a term that is not defined by the BSA or any rule yet adopted by FinCEN. The Investment Company Act of 1940 (codified at 15 U.S.C. 80a) (“1940 Act”) defines the term, and subjects registered investment companies to a comprehensive scheme of regulation administered by the Securities and Exchange Commission (“SEC”). In April 2002, FinCEN issued an interim final rule requiring investment companies that are “mutual funds” (i.e., registered open-end management investment companies as described in the 1940 Act) to develop and implement anti-money laundering programs reasonably designed to prevent them from being used to launder money or finance terrorist activities. By separate interim rule, Treasury temporarily exempted investment companies other than mutual funds from the requirement of section 5318(h)(1) of the BSA that they establish anti-money laundering programs.

In the interim rule on anti-money laundering programs for mutual funds, Treasury observed that there are a number of entities excluded from the 1940 Act definition of “investment company,” and that those entities in the future would likely be required to establish anti-money laundering programs under section 352 of the Act. Today, FinCEN is proposing a new rule that would define an investment company to include certain investment vehicles not subject to regulation under the 1940 Act, and require these entities to establish anti-money laundering programs in accordance with guidelines included in the rule. These guidelines are substantially the same as those FinCEN has established for mutual funds.

II. Unregistered Investment Companies—General Issues

While Treasury believes it is incumbent upon all United States businesses to be on guard against their use by terrorists or other criminals for money laundering, the BSA imposes legal obligations only on certain “financial institutions” to develop and implement anti-money laundering programs. The “financial institutions” covered by the BSA are listed in section 5312 of that Act, and generally include businesses that deal in cash, securities, or other types of assets that can be readily converted to cash. The term “unregistered investment company,” which is a subset of the term “investment company,” could include a large range of entities from small investment clubs to large corporate holding companies, and, in between, a vast array of financing vehicles that are unlikely to be used for money laundering purposes. An overly expansive definition of “unregistered investment company” would unnecessarily burden businesses not likely to be used to launder money. Moreover, it would bring within the scope of the BSA's anti-money laundering requirements so many entities as to tax resources of the federal regulatory agencies charged with oversight of the financial institutions, diminishing the effectiveness of that oversight. To avoid these results, the Treasury staff has worked closely with staffs of the SEC and the Commodity Futures Trading Commission (“CFTC”) to fashion a definition designed to balance the need for a comprehensive national program to prevent money laundering against the burdens imposed by the BSA on businesses, including small businesses.

Definition of Unregistered Investment Company

The proposed rule would define “unregistered investment company” as (i) an issuer that, but for the exclusions provided in sections 3(c)(1) and 3(c)(7) of the 1940 Act, would be an investment company under the 1940 Act, (ii) a commodity pool, and (iii) a company that invests primarily in real estate and/or interests therein. This definition generally would include entities consisting of pools of various asset classes: securities, commodity interests, and real estate. Several types of investment companies that are not registered under the 1940 Act would be covered by this definition, including hedge funds, private equity funds, venture capital funds, commodity pools and real estate investment trusts (REITs), in order to protect against their use for possible money laundering.

As noted above, the proposed rule would apply to commodity pools, which are operated by commodity pool operators (“CPOs”). CPOs that are not exempted under CFTC regulations are registered with, and subject to regulation by, the CFTC and the National Futures Association (“NFA”), the futures industry self-regulatory organization. The USA Patriot Act added CPOs to the BSA definition of “financial institution.”

FinCEN requests comment whether there are other entities, not covered by other rules requiring anti-money laundering programs, that pool assets and provide a similar opportunity for money laundering or terrorist financing, and whether such entities should be required by the final rule to establish anti-money laundering programs.

Because of the broad scope of the type and nature of businesses that may rely on the exceptions to the 1940 Act, may be commodity pools, or that may invest in real estate, we propose to narrow the definition of unregistered investment company through three limitations and three exceptions described below.

(i) Limitations

(A) Redemption Rights. Under the proposed definition, an “unregistered investment company” would include only those companies that give an investor a right to redeem any portion of his or her ownership interest within two years after that interest was purchased. Because these investment vehicles rarely receive from or disburse to investors significant amounts of currency, they are not as likely as other types of financial institutions (e.g., banks) to be used during the initial or “placement” stage of the money laundering process. Money laundering is more likely to occur through these entities at the “layering” stage of the money laundering process, which generally requires the money launderer to be able to redeem his or her interests in the company. Moreover, companies that offer interests that are not redeemable or that are redeemable only after a lengthy holding or “lock-up” period lack the liquidity that makes certain financial institutions attractive to money launderers in the first place. This “redeemablilty” requirement is likely to exclude publicly traded REITs, and entities that require lengthy investment periods without the ability to redeem assets, including private REITs, a large number of special purpose financing vehicles, and many private equity and venture capital funds. These types of illiquid companies are not likely to be used by money launderers.

FinCEN requests comment on whether a two-year limit is appropriate, given the purpose of the rule. Should the limitation be for a longer or shorter period? FinCEN assumes that most hedge funds would be required to adopt anti-money laundering programs under the rule because they have only a one-year “lock-up” period. Is this assumption correct? Would the limit result in some companies being excluded that may nonetheless be susceptible to use by money launderers? What is the likelihood that hedge funds or other entities will adopt two-year lock-up periods to avoid being subject to the rule?

(B) Minimum Assets. The proposed rule would be limited to companies that, as of the most recently completed calendar quarter, have total assets of $1,000,000 or more. This threshold is designed to exclude investment pools such as investment clubs and other small entities that are unlikely to be used for money laundering. FinCEN requests comment on whether this minimum threshold is appropriate.

(C) Offshore Funds. Because many of these unregistered investment companies operate “offshore” and offer interests in their companies to both U.S. and foreign investors, the proposed rule contains a jurisdictional limitation. The definition of “unregistered investment company” includes only an entity that is organized in the United States, sells ownership interests to a “U.S. person” (as defined in 17 CFR 230.902(k)), or is organized, operated, or sponsored by a U.S. person. FinCEN believes this jurisdictional nexus is appropriate, and that it is reasonable to require such issuers benefiting from the financial and legal systems of the United States (assuming they meet the other requirements of the rule) to establish anti-money laundering programs to prevent, detect, and facilitate the prosecution of international money laundering and terrorist financing. FinCEN requests comment on whether this jurisdictional limitation is appropriate.

Exceptions

The proposed rule excepts companies that are owned by one family (“family companies”) from the definition of unregistered investment company. The rule also excepts employees' securities companies, which are investment companies established by employers for the benefit of employees. The rule further excepts employee benefit plans that are not construed to be pools in CFTC Rule 4.5(a)(4). None of these types of companies is likely to be used for money laundering purposes by third parties given their size, structure and purpose. Finally, the rule would except companies that are also another type of “financial institution” under the BSA (such as a broker-dealer) to prevent duplicative application of the BSA anti-money laundering rules to the same financial institution.

FinCEN requests comment on whether these exceptions from the definition are appropriate and whether there are other entities that should be specifically included in or specifically excluded (through additional limitations or exceptions) from the definition of “unregistered investment company.”

III. The Anti-Money Laundering Program

The proposed rule follows recent regulatory actions concerning the establishment of anti-money laundering programs by financial institutions. The proposed rule sets forth minimum requirements for an anti-money laundering program for unregistered investment companies that implement the standards outlined in BSA section 5318(h)(1). The proposed rule would require that, by 90 days following publication of a final rule, unregistered investment companies develop and implement anti-money laundering programs reasonably designed to prevent them from being used to launder money or finance terrorist activities and achieve and monitor compliance with the applicable requirements of the BSA and Treasury's implementing regulations.

The legislative history of the BSA explains that the requirement to have an anti-money laundering program is not a one-size-fits-all requirement. The general nature of the requirement reflects Congress's intent that each financial institution should have the flexibility to tailor its program to fit its business, taking into account factors such as size, location, activities and risks or vulnerabilities to money laundering. This flexibility is designed to ensure that all firms subject to the statute, from the largest to the smallest firms, have in place policies and procedures that are both effective and appropriate to guard against money laundering. To assure that this requirement receives the highest level of attention throughout these diverse industries, the proposed rule requires that each unregistered investment company's program be approved in writing by the board of directors or trustees, the general partner or, if the foregoing do not exist, senior management. The four required elements of the anti-money laundering program are discussed below.

(1) Establish and Implement Policies, Procedures, and Internal Controls Reasonably Designed To Prevent Unregistered Investment Companies From Being Used To Launder Money or Finance Terrorist Activities, Including But Not Limited to Achieving Compliance With the Applicable Provisions of the BSA and the Implementing Regulations Thereunder

Written policies and procedures, which form the basis of any compliance program, should set forth clearly the details of the program, including the responsibilities of the individuals and departments involved. Because unregistered investment companies operate through a variety of different business models, one generic anti-money laundering program for this industry is not possible; rather, each unregistered investment company must develop a program based upon its own business structure. This provision requires that each unregistered investment company identify its vulnerabilities to money laundering and terrorist financing activity, understand the BSA requirements applicable to it, identify the risk factors relating to these requirements, design the procedures and controls that will be required to reasonably assure compliance with these requirements, and periodically assess the effectiveness of the procedures and controls. Policies, procedures, and internal controls should be reasonably designed to detect activities indicative of money laundering. Transactions that could indicate potential money laundering include the use of questionable checks and unusual wire activity. For example, an investment in an unregistered investment company by check drawn on the account of a third party, or by one or more wire transfers from an account of a third party, in each case unrelated to the investor, could be indicative of attempted money laundering. Other examples of “red flags” that may indicate potential illegal activity include investor difficulty in describing the reasons for frequent wire transfers to unfamiliar bank accounts or jurisdictions other than the investor's home country; frequent purchases of interests in unregistered investment companies followed by redemptions, particularly if the resulting proceeds are wired to unrelated third parties or bank accounts in foreign countries; non-economic transfers, such as the purchase of an interest for a large dollar amount followed by redemption with indifference as to penalty amounts charged by the company for engaging in such a transaction; transfers to accounts in countries where drug trafficking is known to occur or other high-risk countries; and the transfer of a monetary instrument or an investment interest from a foreign government to a private person. An unregistered investment company that identifies suspicious activity should take reasonable steps to determine if its suspicions are justified and respond accordingly, including refusing to enter into a transaction that appears designed to further illegal activity.

Policies, procedures, and internal controls should also be reasonably designed to assure compliance with BSA requirements. The only BSA requirement currently applicable to unregistered investment companies is the obligation to report on Form 8300 the receipt of cash or certain noncash instruments totaling more than $10,000 in one transaction or two or more related transactions.

We also note that unregistered investment companies may become subject to additional BSA requirements, including customer and investor identification and verification under section 326 of the Act and filing suspicious activity reports. If unregistered investment companies become subject to additional requirements, their compliance programs will need to be updated to include appropriate policies, procedures, training, and testing functions.

Unregistered investment companies typically conduct their operations, as do mutual funds, through separate entities such as fund administrators, investment advisers, CPOs, commodity trading advisors, broker-dealers (including prime brokers), and futures commission merchants. Some elements of the compliance program will best be performed by personnel of these separate entities, in which case it is permissible for an unregistered investment company to contractually delegate the implementation and operation of those aspects of its anti-money laundering program to such an entity. Any unregistered investment company that delegates responsibility for aspects of its anti-money laundering program to a third party, however, remains fully responsible for the effectiveness of the program, as well as ensuring that federal examiners are able to obtain information and records relating to the anti-money laundering program and to inspect the third party for purposes of the program. In addition, an unregistered investment company would remain responsible for assuring compliance with this regulation. The unregistered investment company is still responsible for taking reasonable steps to identify the aspects of its operations that may give rise to BSA regulatory requirements or that are vulnerable to money laundering or terrorist financing activity; developing and implementing a program reasonably designed to achieve compliance with such regulatory requirements and to prevent such activity; monitoring the operation of its program; and assessing its effectiveness. For example, it would not be sufficient for an unregistered investment company simply to obtain a certification from its delegate that the company “has a satisfactory anti-money laundering program.”

Investors in unregistered investment companies may include individuals and institutional investors (such as pension funds and corporations), as well as other registered and unregistered investment companies (i.e., “funds of hedge funds”). The diversity and complexity of unregistered investment company structures, particularly those with offshore operations, may result in a lack of transparency regarding the entities that invest in the unregistered investment company. An unregistered investment company would need to analyze the money laundering risks posed by any entity that invests in it, by using a risk-based evaluation of relevant factors regarding the investing entity. Those factors include the type of entity, its operator or sponsor, its location, the type of regulation to which that entity or its operator is subject, whether the entity has an anti-money laundering program, and the terms of any such program. Unregistered investment companies should account for any risks posed by any offshore operations and affiliates in developing their policies, procedures, and internal controls.

(2) Provide for Independent Testing for Compliance To Be Conducted by Company Personnel or by a Qualified Outside Party

It is necessary that unregistered investment companies conduct periodic testing of their programs to assure that the programs are functioning as designed. Such testing should be accomplished by personnel knowledgeable about the business' money laundering risks as well as BSA requirements. Such testing may be accomplished by employees of the unregistered investment company, its affiliates, or unaffiliated service providers so long as those same employees are not involved in the operation or oversight of the program. The frequency of such a review would depend upon factors such as the size and complexity of the unregistered investment company's operations and the extent to which its business model may make it more vulnerable to money laundering than other institutions. A written assessment or report should be a part of the review, and any recommendations resulting from such review should, of course, be promptly implemented or submitted to the general partner, board of directors or trustees, or, if the foregoing do not exist at the unregistered investment company, senior management for consideration.

(3) Designate a Person or Persons Responsible for Implementing and Monitoring the Operations and Internal Controls of the Program

The unregistered investment company must charge an individual (or committee) with the responsibility for overseeing the anti-money laundering program. The person (or group of persons) should be competent and knowledgeable regarding BSA requirements and money laundering issues and risks, and empowered with full responsibility and authority to develop and enforce appropriate policies and procedures throughout the company. Whether the compliance officer is dedicated full time to BSA compliance would depend upon the size and complexity of the company. Although in some cases the implementation and operation of the compliance program will be conducted by entities (and their employees) other than the unregistered investment company, the person responsible for the supervision of the overall program should be an unregistered investment company's officer, trustee, general partner, organizer, operator, or sponsor, as appropriate.

(4) Provide Ongoing Training for Appropriate Persons

Employee training is an integral part of any anti-money laundering program. In order to carry out their responsibilities effectively, employees of an unregistered investment company (and of any affiliated and third-party service providers) must be trained regarding the BSA requirements that are relevant to their functions and the signs of money laundering that could arise in the course of their duties. Such training could be conducted by outside or in-house seminars, and could include computer-based training. The level, frequency, and focus of the training would be determined by the responsibilities of the employees and the extent to which their functions bring them in contact with BSA requirements or possible money laundering activity. Consequently, the training program should provide both a general awareness of overall BSA requirements and money laundering issues, as well as more job-specific guidance regarding the particular employee's role and function in the anti-money laundering program. For those employees whose duties bring them in contact with BSA requirements or possible money laundering activity, the requisite training should occur when the employee assumes those duties. Moreover, these employees should receive periodic updates and refreshers regarding the anti-money laundering program.

(5) Notice Requirement

Unlike many other financial institutions subject to the anti-money laundering regime in the BSA, such as banks, savings associations, and mutual funds, unregistered investment companies are not necessarily registered with or identifiable by Treasury or another Federal functional regulator. Without a methodology for identifying or locating these unregistered entities, there would be virtually no way for Treasury or the appropriate Federal functional regulators to assure, with any degree of certainty, through examination or enforcement, that covered unregistered investment companies are in compliance with the rule. Furthermore, while certain companies, particularly larger hedge funds, REITS, private equity funds and venture capital funds, may be identified through trade associations or other relatively simple search methods, other, smaller, less public or offshore entities could escape scrutiny. For the rule to operate and be enforced effectively there must be a practical means of identifying and locating companies subject to the rule.

The BSA authorizes the Secretary of the Treasury to prescribe (after consultation with the appropriate Federal functional regulator) minimum standards for anti-money laundering programs established under the BSA and to require a class of financial institutions to maintain appropriate procedures ensure compliance with the BSA. Notice of the identity of the members of a regulated class is a key procedure in the effective monitoring and enforcement of compliance with the BSA. Therefore, the proposed rule requires that each unregistered investment company file a short notice (“Notice”) identifying itself and providing some very basic information about the company.

The notice filing requirement is implicitly authorized by the BSA as a “legitimate, reasonable, and direct adjunct” to the Secretary's explicit statutory authority to require financial institutions to adopt compliance programs to detect and prevent money laundering in 31 U.S.C. 5318(a)(2), as well as the Secretary's broad powers under the BSA to require reports and records useful to criminal tax and regulatory uses. Because many unregistered investment companies lack a federal functional regulator, without a notice requirement of some kind, Treasury (or its designee) would lack the means to examine for and enforce compliance with the rule. The notice requirement is therefore a direct adjunct to the Secretary's enforcement authority. Indeed, there are a number of agency regulations requiring notice filings and other types of filings that Congress did not explicitly authorize. For example, the Office of the Comptroller of the Currency, under its general authority regulatory authority in 12 U.S.C. 93a, has promulgated regulations governing the issuance of investment securities of national banks that are expressly exempt from certain registration requirements of the federal securities laws. Similarly, the CFTC has issued rules that require CPOs that are exempt from registration to file a notice claiming eligibility for the exemption.

The Notice would be required to include—

• The name, address, e-mail address and telephone number of the unregistered investment company;
• The name, address, e-mail address, telephone number and registration number of any investment adviser, commodity trading advisor, CPO, organizer or sponsor of the unregistered investment company;
• The name, e-mail address and telephone number of the designated anti-money laundering program compliance officer;
• The dollar amount of assets under management held by the unregistered investment company; and
• The number of participants, interest holders or security holders in the unregistered investment company.

Filing Procedures. An unregistered investment company would have to file with FinCEN a Notice described in Appendix C of subpart I of 31 CFR part 103. Completed Notices may be submitted to FinCEN by accessing FinCEN's Internet Web site, http://www.treas.gov/fincen,, and entering the appropriate information as directed, or by mail to: FinCEN, PO Box 39, Mail Stop 100, Vienna, VA 22183.

Filing Date. An unregistered investment company would have to file a Notice within 90 days after it first becomes subject to the provisions of this rule.

Amendments. An unregistered investment company would have to file an amendment to its Notice not later than 30 days after any change to the information in the Notice other than the amount of assets under management or the number of participants, interest holders or security holders.

Withdrawal. An unregistered investment company would have to withdraw its Notice within 90 days after ceasing to be subject to the provisions of this rule.

Finally, unregistered investment companies would be encouraged to adopt procedures for voluntarily filing Suspicious Activity Reports with FinCEN and for reporting suspected terrorist activities to FinCEN using its Financial Institutions Hotline (1-866-566-3974).

FinCEN requests comment regarding whether the proposed notice requirement is appropriate. Is there any other means by which FinCEN could readily identify all the unregistered investment companies subject to the proposed rule? Should those commodity pools that are identified in the database of the NFA be exempt from this requirement?

IV. Regulatory Flexibility Act

It is hereby certified that this proposed regulation will not have a significant economic impact on a substantial number of small entities. The costs associated with the development of anti-money laundering programs are attributable to the mandates of section 352 of the Act. Moreover, because the proposed rule applies only to those unregistered investment companies with assets of $1,000,000 or more and also excludes family companies, employees' securities companies, and certain employee benefit plans that are not construed to be pools, it is unlikely that many small unregulated investment companies will be subject to the rule. In addition, the proposed rule will not impose significant burdens on those small unregistered investment companies covered by the rule because they are already subject to Form 8300 reporting and may build on their existing risk management procedures and prudential business practices to ensure compliance with this rule as well as anti-money laundering risk management. Similarly, the procedures currently in place at mutual funds to comply with existing BSA rules should assist unregistered investment companies in establishing their anti-money laundering programs. Finally, the unregistered investment companies subject to the rule will not be compelled to obtain more sophisticated legal or accounting advice than that already required by such companies to run their businesses.

V. Executive Order 12866

The Department of the Treasury has determined that this proposed rule is not a significant regulatory action under Executive Order 12866. Accordingly, a regulatory impact analysis is not required.

VI. Paperwork Reduction Act

The collections of information contained in this proposed rule are being submitted to the Office of Management and Budget for review in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)). Comments on the collection of information should be sent (preferably by fax (202-395-6974)) to Desk Officer for the Department of the Treasury, Office of Information and Regulatory Affairs, Office of Management and Budget, Paperwork Reduction Project (1506), Washington, DC 20503 (or by the Internet to jlackeyj@omb.eop.gov), with a copy to FinCEN by mail or the Internet at the addresses previously specified. Comments on the collection of information should be received by November 25, 2002.

The collections of information in this proposed rule are in 31 CFR 103.132(b) and (d). The information will be used by federal agencies to verify compliance by unregistered investment companies with the provisions of 31 CFR 103.132. The collections of information are mandatory.

Description of Recordkeepers and Responders: Unregistered investment companies as defined in 31 CFR 103.132(a).

Estimated Number of Recordkeepers: 5,000.

Estimated Average Annual Burden Per Recordkeeper: The estimated average burden associated with the recordkeeping requirement in this proposed rule is 1 hour per recordkeeper.

Estimated Total Annual Recordkeeping Burden: 5,000 hours.

Estimated Number of Respondents: 5,000.

Estimated Average Annual Burden Per Respondent: The estimated average burden associated with the notice requirement in this proposed rule is 30 minutes per respondent.

FinCEN specifically invites comments on the following subjects: (a) Whether the collections of information are necessary for the proper performance of the mission of FinCEN, including whether the information shall have practical utility; (b) the accuracy of FinCEN'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 unregistered investment companies, 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.

List of Subjects in 31 CFR Part 103

• Banks
• Banking
• Brokers
• Commodities futures
• Counter money laundering
• Counter-terrorism
• Currency
• Foreign banking
• Reporting and recordkeeping requirements

PART 103—FINANCIAL RECORDKEEPING AND REPORTING OF CURRENCY AND FOREIGN TRANSACTIONS

1. The authority citation for part 103 continues to read as follows:

Authority: 12 U.S.C. 1829b and 1951-1959; 31 U.S.C. 5311-5331; title III, secs. 314, 352, Pub. L. 107-56, 115 Stat. 307.

2. In subpart I, add new § 103.132 to read as follows: