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CUNA Regulatory Comment Call

March 12, 2003

EXECUTIVE SUMMARY

In 1998, Financial Crimes Enforcement Network ("FinCEN") granted a conditional exception ("the CIF Exception") to the strict operation of the so-called ("Travel Rule") in the Bank Secrecy Act. The Travel Rule requires financial institutions to include the true name and address of their member or customer for transmittal orders of $3,000 or more. The CIF Exception permits financial institutions to substitute coded information for the true name and address of a member or customer in a funds transmittal order. FinCEN deems it appropriate to let this exception expire in light of congressional calls for financial transparency after the terrorist attacks and because of evidence of abuse of the exception.

• FinCEN will allow this conditional exception to expire on June 1, 2003, so that financial institutions will be required to submit the true name and address of the member or customer seeking to make a funds transmittal. This notice of expiration was published in the Federal Register on Friday, March 7, 2003. You may also click here for a copy of this notice.



• FinCEN requests comments on the expiration of this conditional order by April 21, 2003. Please submit your comments to CUNA by April 7, 2003.

Please feel free to fax your responses to CUNA’s questions at 202-638-7052; e-mail them to Associate General Counsel Mary Dunn at mdunn@cuna.com and to Assistant General Counsel Michelle Profit at mprofit@cuna.com ; or mail them to Mary and Michelle in c/o CUNA’s Regulatory Advocacy Department, 601 Pennsylvania Avenue, NW, South Building, Suite 600, Washington, D.C. 20004-2601.

Credit unions may also send letters directly to FinCEN. Comments submitted by electronic mail may be sent to regcomments@fincen.treas.gov with the caption in the body of the text, "ATTN: Conditional Exception Expiration." Comments also may be submitted by paper mail to FinCEN, PO Box 39, Vienna, VA 22183-0039, "ATTN: Conditional Exception Expiration." FinCEN requests comments by one method only.

BACKGROUND

The Travel Rule requires financial institutions to include certain information in transmittal orders of $3,000 or more. This information must "travel" with the order throughout the funds transmittal sequence. The requirement is that each transmitter’s financial institution and intermediary financial institution include in a transmittal order the transmitter’s true name and street address.

Financial institutions told FinCEN that their ability to comply with the Travel Rule depended on their ability to use their automated customer information files ("CIFs"). Although an originating institution always knew the originating member’s true name and address, the CIFs were often programmed with coded or nominee names and addresses. According to FinCEN, the reprogramming tasks involved in changing the CIFs were represented to be a significant barrier to compliance with the Travel Rule. In light of these burdens, FinCEN instituted the conditional exception and extended it twice.

This conditional exception provides that a financial institution may fulfill the requirements of the Bank Secrecy Act on satisfaction of the conditions below:

• The CIFs are not altered for the relevant transmittal;
• The CIFs are generally programmed and used by the institution for customer communications, and generally generate other than true name and street address information;
• The financial institution itself can match the CIF information with the true name and street address of the transmitter;
• The transmittal order marks with a question mark every instance where the transmitter is designated by something other than his or her true name;
• Any currency transaction report or suspicious activity report completed by the institution with respect to the funds transmittal contains the true name and address information for the transmitter and plainly associates the report with the particular funds transmittal in question.

1. Are there any other technological barriers associated with full compliance with the Travel Rule?
   
   

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2. Will your credit union be able to comply fully with the Travel Rule on June 1, 2003, when the conditional exception expires? Please explain.
   
   

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3. Will additional time be required for your credit union to comply with the Travel Rule after the expiration of the conditional exception? If so, how long?
   
   

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4. FinCEN asks does the CIF exception adversely affect law enforcement investigations? Please explain.
   
   

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5. Does your credit union believe that there is the potential for or actual abuse of the CIF exception? Please explain.
   
   

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6. Will the expiration of this conditional exception present costs or benefits to your credit union? Please explain that and any additional comments you have on this notice of expiration.
   
   

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   Please submit your address and phone number.

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