CUNA Regulatory Comment Call


January 7, 2005

FinCEN Revised "Designation of Exempt Person" Form

EXECUTIVE SUMMARY

  • The U.S. Treasury Department’s Financial Crimes Enforcement Network (FINCEN) has published for public comment a draft revised version of its "Designation of Exempt Person" form. The form is used by credit unions and other depository institutions to designate their eligible members/customers as exempt from the requirement to report transactions in currency over $10,000, meaning the institution does not have to file Currency Transaction Reports (CTRs) on those particular members/customers. The information on the form is used by FinCEN to determine whether the institution has properly exempted its members/customers.

  • The Bank Secrecy Act and Treasury regulations require all financial institutions, including credit unions, to file a CTR of each deposit, withdrawal, payment, transfer or other transactions involving currency (cash) of more than $10,000 a day. If multiple transactions are made by or on behalf of any person, the financial institution must consolidate the transactions and report them as one transaction if the total exceeds $10,000. Currency transaction reporting assists the regulatory agencies and law enforcement with combating international terrorism and money laundering. CUNA’s e-Guide contains more information about the CTR filing requirements at http://www.cuna.org/compliance/member/download/eguide_bsa_sum.pdf.

  • Entities eligible for CTR exemption are: banks, government agency/governmental authority, company listed on a stock exchange and their subsidiaries, certain businesses that are not listed on a stock exchange, and payroll customers.

  • The new form to replace the form currently being used (TD F 90-22.53) will be FinCEN Form 110. Form 110 is scheduled to be accepted by FinCEN beginning July 2005.

  • The form states that previous editions of the "Designation of Exempt Person" form will not be accepted after January 2006. However, elsewhere it states previous editions will not be accepted after June 30, 2006. CUNA is checking with FinCEN about that discrepancy and will update this document as soon as we have cleared up the contradiction.

  • In addition to the renumbering to conform to the FinCEN numbering system, Form 110 simplifies some of the data elements based on information received from federal regulators as well as questions received through the FinCEN Helpline, including:
    • Several data boxes have been removed or reformatted:
      • The box for effective date of the exemption has been moved from Part II - Basis for Exemption to the new Part I – Filing Information.
      • The boxes for type of filing have been moved from the top untitled section to Part I – Filing Information.
      • Part I - Exempt Person has been moved to Part II – Exempt Person Information. The line "Business Name or Name of Sole Proprietor" has been changed to "Legal name of the exempt person".
      • The title of the box for the exempt person’s "Taxpayer Identifier Number" box is changed to "EIN or SSN".
      • The title of Part III - Bank Granting or Revoking Exemption has been changed to Filer Information.
    • The most significant changes involve the inclusion of wording pertaining to bank affiliates:
      • Part III – Filer Information contains a box to be checked if the exempt designation is being made for one or more affiliate banks.
      • In Part IV – Signature, the section has been modified to eliminate information for person to contact at the institution (the title and signature of authorized official at the institution are still required). The signature statement contains the declaration that the signatory is authorized on behalf of the bank granting the exemption and any listed bank subsidiaries.
      • The form includes new wording in Part V - Biennial Renewal Certification section. (Exemptions for non-listed businesses and payroll customers must be refiled every two years.) The certification for suspicious activity monitoring indicates that certification is being made on behalf of the filer and any applicable bank subsidiaries (bank subsidiaries will no longer have to make their own certifications).

    • The instructions on the new form have been expanded and clarified to assist in correctly completing the form:
      • Credit unions are specifically mentioned as being covered by the term "bank" with respect to persons of authorization to exempt members/customers from CTR filing.
      • The form can be e-filed through the Patriot Act Communications System (PACS). [On October 2, 2002, FinCEN initiated PACS to enable financial institutions that must file under the anti-money laundering provisions of the USA PATRIOT Act to send Suspicious Activity Reports (SARs) and CTRs via a highly secure Internet service. More information on PACS is available on the Internet at http://pacs.treas.gov/index.jsp.]
      • General definitions for each of the six types of exempt persons are no longer included.
      • Specific detailed explanations as to how to complete each item are given.
      • There is an explanation of the procedure for listing additional affiliate banks.

    • Comments are due to FinCEN by February 25, 2005. Please send your comments to CUNA by February 11, 2005. Please feel free to fax your responses to CUNA at 202-638-7052; e-mail them to Associate General Counsel Mary Dunn at mdunn@cuna.com or to Senior Regulatory Counsel Catherine Orr at corr@cuna.com; or mail them in c/o CUNA's Regulatory Advocacy Department, 601 Pennsylvania Avenue, NW, 6th Floor - South Building, Washington, DC 20004-2601. Click here for a copy of the draft form.

    QUESTIONS REGARDING THE DRAFT REVISED FORM

    1. Do you agree with the proposed revisions to the new “Designation of Exempt Person?” form?

      Yes ______ No ______

      If not, what revisions do you feel are unwarranted?











    2. Are there any other modifications that should be made to the new “Designation of Exempt Person” form so that is it more streamlined and user-friendly?

      Yes ______ No ______

      If yes, what additional modifications should be made?











    3. Other comments (other ways to enhance the quality, utility, and clarity of the information to be collected on the form)?











    Eric Richard • General Counsel • (202) 508-6742 • erichard@cuna.com
    Mary Mitchell Dunn • SVP & Associate General Counsel • (202) 508-6736 • mdunn@cuna.com
    Jeffrey Bloch • Assistant General Counsel • (202) 508-6732 • jbloch@cuna.com
    Lilly Thomas • Assistant General Counsel • (202) 508-6733 • lthomas@cuna.com
    Catherine Orr • Senior Regulatory Counsel • (202) 508-6743 • corr@cuna.com
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