(BILLING CODE: 4820-03-P)

**DEPARTMENT OF THE TREASURY**

**Financial Crimes Enforcement Network**

**31 CFR Part 103**

**RIN 1506-AA25**

**Amendment to the Bank Secrecy Act Regulations \--**

**Requirement that Nonfinancial Trades or Businesses Report Certain
Currency Transactions**

**AGENCY:** Financial Crimes Enforcement Network (\"FinCEN\"), Treasury.

**ACTION:** Interim Rule.

**SUMMARY:** This document contains an interim rule amending the Bank
Secrecy Act regulations to require that persons who, in the course of
conducting a nonfinancial trade or business, receive more than \$10,000
in coins or currency in one transaction (or two or more related
transactions), file a report of such transaction with the Treasury
Department.

**DATES:** This interim rule is effective as of January 1, 2002.

**FOR FURTHER INFORMATION CONTACT:** Cynthia L. Clark, Deputy Chief
Counsel, or Laurence J. Levine, Attorney-Advisor, Office of Chief
Counsel, FinCEN, (703) 905-3590.

**SUPPLEMENTARY INFORMATION:**

I. [Introduction]{.underline}.

This document adds, as an interim rule, a new section 31 CFR 103.30. The
Interim Rule is adopted to implement the terms of 31 U.S.C. 5331, which
was added to the Bank Secrecy Act by section 365 of the Uniting and
Strengthening America by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism (USA PATRIOT) Act of 2001, Pub. L.
107-56 (October 26, 2001).

II\. [Statutory Provisions]{.underline}.

The Bank Secrecy Act, Titles I and II of Pub. L. 91-508, as amended,
codified at 12 U.S.C. 1829b, 12 U.S.C. 1951‑1959, and 31 U.S.C. 5311,
[et]{.underline} [seq.]{.underline}, authorizes the Secretary of the
Treasury, [inter]{.underline} [alia]{.underline}, to issue regulations
requiring financial institutions to keep records and file reports that
are determined to have a high degree of usefulness in criminal, tax, and
regulatory matters, or in the conduct of intelligence or
counter-intelligence activities, to protect against international
terrorism, and to implement counter-money laundering programs and
compliance procedures.[^1] Regulations implementing Title II of the Bank
Secrecy Act (codified at 31 U.S.C. 5311, [et]{.underline}
[seq]{.underline}.), appear at 31 CFR Part 103. The authority of the
Secretary to administer Title II of the Bank Secrecy Act has been
delegated to the Director of FinCEN.

Under 31 U.S.C. 5331, any person who is engaged in a trade or business
and who, in the course of such trade or business, receives more than
\$10,000 in coins or currency in one transaction (or two or more related
transactions) is required to file a report with respect to such
transaction (or related transactions) with the Treasury Department.
Reporting under section 5331 does not apply to amounts received in a
transaction reported under 31 U.S.C. 5313 and the accompanying
regulations.

For purposes of section 5331, currency includes foreign currency, and to
the extent provided in regulations, any monetary instrument, whether or
not in bearer form, with a face amount of not more than \$10,000. Such
monetary instruments shall not include any check drawn on the account of
the writer in a financial institution referred to in subparagraph (A),
(B), (C), (D), (E), (F), (G), (J), (K), (R), or (S) of 31 U.S.C. 5312
(a)(2).

Reports required under section 5331 must be in such form as the
Secretary may prescribe. The reports must contain: (1) the name,
address, and such other identification information as the Secretary may
require, of the person from whom the coins or currency was received; (2)
the amount of coins or currency received; (3) the date and nature of the
transaction; and (4) such other information, including the
identification of the person filing the report, as the Secretary may
prescribe.

III\. [Interim Rule]{.underline}.

With a minor exception, section 5331 requires reporting of the same
transaction that must be reported to the Internal Revenue Service
("IRS") under section 6050I of title 26, United States Code, and 26 CFR
1.6050I-1. Section 5331 does not require reporting of currency received
by clerks of court. [Cf]{.underline}. 26 U.S.C. 6050I(g). Further,
section 5331 does not require the person making a report under section
5331 to furnish to the person whose name is required to be set forth on
the report a statement concerning the report. [Cf]{.underline}. 26
U.S.C. 6050I(e).

Because section 5331 is substantially similar to 26 U.S.C. 6050I, the
Interim Rule provides that persons required to report a transaction
under section 5331 must make that report by filing a joint FinCEN/IRS
form with the IRS. Under this dual-reporting regime, only one form is
required to be filed for a transaction subject to both section 5331 and
section 6050I of title 26. Thus, the Interim Rule imposes no new
reporting or record-keeping burden on persons required to report certain
transactions under section 5331.

Because of the similarity between the provisions, FinCEN believes it is
appropriate for the Interim Rule to adopt the same rules for multiple
payments, monetary instruments, and designated reporting transactions as
appear in the regulations under section 6050I. Thus, for example, the
Interim Rule requires that recipients aggregate an initial payment and
subsequent payments such that a report is required if the aggregation
exceeds \$10,000 within one year of the initial payment. In addition,
the Interim Rule, like 26 CFR 1.6050I-1, includes within the definition
of currency monetary instruments such as cashiers' checks, bank drafts,
traveler's checks or money orders, not having a face amount of more than
\$10,000, when such monetary instruments are received in a "designated
reporting transaction," [i.e.]{.underline}, certain retail sales as
defined in the regulation.

IV\. [Regulatory Flexibility Act]{.underline}.

The provisions of the Regulatory Flexibility Act relating to initial and
final regulatory flexibility analysis (5 U.S.C. 604) are not applicable
to this Interim Rule because FinCEN was not required to publish a notice
of proposed rulemaking under 5 U.S.C. 553 or any other law.

V. [Paperwork Reduction Act]{.underline}.

This regulation is being issued without prior notice and public
procedure pursuant to the Administrative Procedure Act (5 U.S.C. 553).
For this reason, the

collection of information contained in this regulation has been reviewed
under the requirements of the Paperwork Reduction Act (44 U.S.C.
3507(j)) and approved by the Office of Management and Budget (OMB) under
control number 1506-0018. An agency may not conduct or sponsor, and a
person is not required to respond to, a collection of information unless
it displays a valid control number assigned by OMB.

To submit comments concerning the collection of information described in
this Interim Rule, please refer to the companion Notice of Proposed
Rulemaking published elsewhere in this issue of the [Federal
Register]{.underline}.

VI\. [Executive Order 12866]{.underline}.

The Department of the Treasury has determined that this Interim Rule is
not a significant regulatory action under Executive Order 12866.

VII\. [Unfunded Mandates Act of 1995 Statement]{.underline}.

Section 202 of the Unfunded Mandates Reform Act of 1995, Pub. L. 104-4
(Unfunded Mandates Act), March 22, 1995, requires that an agency prepare
a budgetary impact statement before promulgating a rule that includes a
federal mandate that may result in expenditure by state, local, and
tribal governments, in the aggregate, or by the private sector, of \$100
million or more in any one year. If a budgetary impact statement is
required, section 202 of the Unfunded Mandates Act also requires an
agency to identify and consider a reasonable number of regulatory
alternatives before promulgating a rule. FinCEN has determined that it
is not required to prepare a written statement under section 202 and has
concluded that on balance this proposal provides the most cost-effective
and least burdensome alternative to achieve the objectives of the rule.

VIII\. [Administrative Procedure Act]{.underline}.

Because the Interim Rule implements the statute, imposes no additional
burden on the public, and addresses the collection of records that may
be integral in ongoing antiterrorism and other criminal and regulatory
investigations or proceedings, it is found to be impracticable,
unnecessary, and contrary to the public interest to comply with notice
and public procedure under 5 U.S.C. 553(b). For these reasons, the
Interim Rule is made effective before 30 days have passed after its
publication date. [See]{.underline} 5 U.S.C. 553(d).

**List of Subjects in 31 CFR Part 103**

Authority delegations (Government agencies), Banks and banking,
Currency, Investigations, Law enforcement, Reporting and recordkeeping
requirements.

[Proposed Amendments to the Regulations]{.underline}

For the reasons set forth above in the preamble, 31 CFR Part 103 is
amended as follows:

**PART 103 ‑‑ FINANCIAL RECORDKEEPING AND REPORTING OF CURRENCY AND
FOREIGN TRANSACTIONS**

1\. The authority citation for Part 103 is amended to read as follows:

**Authority:** 12 U.S.C. 1829b and 1951-1959; 31 U.S.C. 5311-5331.

2\. A new section 103.30 is added as follows:

§ 103.30 Reports relating to currency in excess of \$10,000 received in
a trade or business.

\(a\) [Reporting requirement]{.underline} \-- (1) [Reportable
transactions]{.underline}. (i) [In general]{.underline}. Any person
(solely for purposes of section 5331 of title 31, United States Code and
this regulation, "person" shall have the same meaning as under 26 U.S.C.
7701 (a)(1)) who, in the course of a trade or business in which such
person is engaged, receives currency in excess of \$10,000 in 1
transaction (or 2 or more related transactions) shall, except as
otherwise provided, make a report of information with respect to the
receipt of currency. This section does not apply to amounts received in
a transaction reported under 31 U.S.C. 5313 and its implementing
regulations.

\(ii\) [Certain financial transactions]{.underline}. Section 6050I of
title 26 requires persons to report information about financial
transactions described below to the IRS, and section 5331 of title 31
requires persons to report similar information about certain
transactions to the Financial Crimes Enforcement Network. This
information shall be reported on the same form as prescribed by the
Secretary.

\(2\) [Currency received for the account of another]{.underline}.
Currency in excess of \$10,000 received by a person for the account of
another must be reported under this section. Thus, for example, a person
who collects delinquent accounts receivable for an automobile dealer
must report with respect to the receipt of currency in excess of
\$10,000 from the collection of a particular account even though the
proceeds of the collection are credited to the account of the automobile
dealer ([i.e]{.underline}., where the rights to the proceeds from the
account are retained by the automobile dealer and the collection is made
on a fee-for-service basis).

\(3\) [Currency received by agents]{.underline} \-- (i) [General
rule]{.underline}. Except as provided in paragraph (a)(3)(ii) of this
section, a person who in the course of a trade or business acts as an
agent (or in some other similar capacity) and receives currency in
excess of \$10,000 from a principal must report the receipt of currency
under this section.

\(ii\) [Exception]{.underline}. An agent who receives currency from a
principal and uses all of the currency within 15 days in a currency
transaction (the "second currency transaction") which is reportable
under section 5312 of title 31, or section 5331 of title 31 of the
United States Code and the regulations thereunder, and who discloses the
name, address, and taxpayer identification number of the principal to
the recipient in the second currency transaction need not report the
initial receipt of currency under this section. An agent will be deemed
to have met the disclosure requirements of this paragraph (a)(3)(ii) if
the agent discloses only the name of the principal and the agent knows
that the recipient has the principal's address and taxpayer
identification number.

\(iii\) [Example]{.underline}. The following example illustrates the
application of the rules in paragraphs (a)(3)(i) and (ii) of this
section:

[Example]{.underline}. B, the principal, gives D, an attorney, \$75,000
in currency to purchase real property on behalf of B. Within 15 days D
purchases real property for currency from E, a real estate developer,
and discloses to E, B's name, address, and taxpayer identification
number. Because the transaction qualifies for the exception provided in
paragraph (a)(3)(ii) of this section, D need not report with respect to
the initial receipt of currency under this section. The exception does
not apply, however, if D pays E by means other than currency, or effects
the purchase more than 15 days following receipt of the currency from B,
or fails to disclose B's name, address, and taxpayer identification
number (assuming D does not know that E already has B's address and
taxpayer identification number), or purchases the property from a person
whose sale of the property is not in the course of that person's trade
or business. In any such case, D is required to report the receipt of
currency from B under this section.

\(b\) [Multiple payments]{.underline}. The receipt of multiple currency
deposits or currency installment payments (or other similar payments or
prepayments) relating to a single transaction (or two or more related
transactions), is reported as set forth in paragraphs (b)(1) through
(b)(3) of this section.

\(1\) [Initial payment in excess of \$10,000]{.underline}. If the
initial payment exceeds \$10,000, the recipient must report the initial
payment within 15 days of its receipt.

\(2\) [Initial payment of \$10,000 or less]{.underline}. If the initial
payment does not exceed \$10,000, the recipient must aggregate the
initial payment and subsequent payments made within one year of the
initial payment until the aggregate amount exceeds \$10,000, and report
with respect to the aggregate amount within 15 days after receiving the
payment that causes the aggregate amount to exceed \$10,000.

\(3\) [Subsequent payments]{.underline}. In addition to any other
required report, a report must be made each time that previously
unreportable payments made within a 12-month period with respect to a
single transaction (or two or more related transactions), individually
or in the aggregate, exceed \$10,000. The report must be made within 15
days after receiving the payment in excess of \$10,000 or the payment
that causes the aggregate amount received in the 12-month period to
exceed \$10,000. (If more than one report would otherwise be required
for multiple currency payments within a 15-day period that relate to a
single transaction (or two or more related transactions), the recipient
may make a single combined report with respect to the payments. The
combined report must be made no later than the date by which the first
of the separate reports would otherwise be required to be made.)

\(4\) [Example]{.underline}. The following example illustrates the
application of the rules in paragraphs (b)(1) through (b)(3) of this
section:

[Example]{.underline}. On January 10, Year 1, M receives an initial
payment in currency of \$11,000 with respect to a transaction. M
receives subsequent payments in currency with respect to the same
transaction of \$4,000 on February 15, Year 1, \$6,000 on March 20, Year
1, and \$12,000 on May 15, Year 1. M must make a report with respect to
the payment received on January 10, Year 1, by January 25, Year 1. M
must also make a report with respect to the payments totaling \$22,000
received from February 15, Year 1, through May 15, Year 1. This report
must be made by May 30, Year 1, that is, within 15 days of the date that
the subsequent payments, all of which were received within a 12-month
period, exceeded \$10,000.

\(c\) [Meaning of terms]{.underline}. The following definitions apply
for purposes of this section --

\(1\) Solely for purposes of section 5331 and this section, "currency"
means --

\(A\) The coin and currency of the United States or of any other
country, which circulate in and are customarily used and accepted as
money in the country in which issued; and

\(B\) A cashier's check (by whatever name called, including "treasurer's
check" and "bank check"), bank draft, traveler's check, or money order
having a face amount of not more than \$10,000 \--

\(1\) Received in a designated reporting transaction as defined in
paragraph (c)(1)(i) of this section (except as provided in paragraphs
(c)(1)(ii), (iii), and (iv) of this section), or

\(2\) Received in any transaction in which the recipient knows that such
instrument is being used in an attempt to avoid the reporting of the
transaction under section 5331 and this section.

\(i\) [Designated reporting transaction]{.underline}. A designated
reporting transaction is a retail sale (or the receipt of funds by a
broker or other intermediary in connection with a retail sale) of \--

\(A\) A consumer durable,

\(B\) A collectible, or

\(C\) A travel or entertainment activity.

\(ii\) [Exception for certain loans]{.underline}. A cashier's check,
bank draft, traveler's check, or money order received in a designated
reporting transaction is not treated as currency pursuant to paragraph
(c)(l)(B)(1) of this section if the instrument constitutes the proceeds
of a loan from a bank. The recipient may rely on a copy of the loan
document, a written statement from the bank, or similar documentation
(such as a written lien instruction from the issuer of the instrument)
to substantiate that the instrument constitutes loan proceeds.

\(iii\) [Exception for certain installment sales]{.underline}. A
cashier's check, bank draft, traveler's check, or money order received
in a designated reporting transaction is not treated as currency
pursuant to paragraph (c)(1)(B)(1) of this section if the instrument is
received in payment on a promissory note or an installment sales
contract (including a lease that is considered to be a sale for Federal
income tax purposes). However, the preceding sentence applies only if
\--

\(A\) Promissory notes or installment sales contracts with the same or
substantially similar terms are used in the ordinary course of the
recipient's trade or business in connection with sales to ultimate
consumers; and

\(B\) The total amount of payments with respect to the sale that are
received on or before the 60th day after the date of the sale does not
exceed 50 percent of the purchase price of the sale.

\(iv\) [Exception for certain down payment plans]{.underline}. A
cashier's check, bank draft, traveler's check, or money order received
in a designated reporting transaction is not treated as currency
pursuant to paragraph (c)(1)(B)(1) of this section if the instrument is
received pursuant to a payment plan requiring one or more down payments
and the payment of the balance of the purchase price by a date no later
than the date of the sale (in the case of an item of travel or
entertainment, a date no later than the earliest date that any item of
travel or entertainment pertaining to the same trip or event is
furnished). However, the preceding sentence applies only if \--

\(A\) The recipient uses payment plans with the same or substantially
similar terms in the ordinary course of its trade or business in
connection with sales to ultimate consumers; and

\(B\) The instrument is received more than 60 days prior to the date of
the sale (in the case of an item of travel or entertainment, the date on
which the final payment is due).

\(v\) [Examples]{.underline}. The following examples illustrate the
definition of "currency" set forth in paragraphs (c)(l)(A) through
(c)(1)(B)(2)(iv) of this section.

[Example 1]{.underline}. D, an individual, purchases gold coins from M,
a coin dealer, for \$13,200. D tenders to M in payment United States
currency in the amount of \$6,200 and a cashier's check in the face
amount of \$7,000 which D had purchased. Because the sale is a
designated reporting transaction, the cashier's check is treated as
currency for purposes of section 5331 and this section. Therefore,
because M has received more than \$10,000 in currency with respect to
the transaction, M must make the report required by section 5331 and
this section.

[Example 2]{.underline}. E, an individual, purchases an automobile from
Q, an automobile dealer, for \$11,500. E tenders to Q in payment United
States currency in the amount of \$2,000 and a cashier's check payable
to E and Q in the amount of \$9,500. The cashier's check constitutes the
proceeds of a loan from the bank issuing the check. The origin of the
proceeds is evident from provisions inserted by the bank on the check
that instruct the dealer to cause a lien to be placed on the vehicle as
security for the loan. The sale of the automobile is a designated
reporting transaction. However, under paragraph (c)(1)(ii) of this
section, because E has furnished Q documentary information establishing
that the cashier's check constitutes the proceeds of a loan from the
bank issuing the check, the cashier's check is not treated as currency
pursuant to paragraph (c)(1)(B)(1) of this section.

[Example 3]{.underline}. F, an individual, purchases an item of jewelry
from S, a retail jeweler, for \$12,000. F gives S traveler's checks
totaling \$2,400 and pays the balance with a personal check payable to S
in the amount of \$9,600. Because the sale is a designated reporting
transaction, the traveler's checks are treated as currency for purposes
of section 5331 and this section. However, because the personal check is
not treated as currency for purposes of section 5331 and this section, S
has not received more than \$10,000 in currency in the transaction and
no report is required to be filed under section 5331 and this section.

[Example 4]{.underline}. G, an individual, purchases a boat from T, a
boat dealer, for \$16,500. G pays T with a cashier's check payable to T
in the amount of \$16,500. The cashier's check is not treated as
currency because the face amount of the check is more than \$10,000.
Thus, no report is required to be made by T under section 5331 and this
section.

[Example 5]{.underline}. H, an individual, arranges with W, a travel
agent, for the chartering of a passenger aircraft to transport a group
of individuals to a sports event in another city. H also arranges with W
for hotel accommodations for the group and for admission tickets to the
sports event. In payment, H tenders to W money orders which H had
previously purchased. The total amount of the money orders, none of
which individually exceeds \$10,000 in face amount, exceeds \$10,000.
Because the transaction is a designated reporting transaction, the money
orders are treated as currency for purposes of section 5331 and this
section. Therefore, because W has received more than \$10,000 in
currency with respect to the transaction, W must make the report
required by section 5331 and this section.

\(2\) [Consumer durable]{.underline}. The term "consumer durable" means
an item of tangible personal property of a type that is suitable under
ordinary usage for personal consumption or use, that can reasonably be
expected to be useful for at least 1 year under ordinary usage, and that
has a sales price of more than \$10,000. Thus, for example, a \$20,000
automobile is a consumer durable (whether or not it is sold for business
use), but a \$20,000 dump truck or a \$20,000 factory machine is not.

\(3\) [Collectible]{.underline}. The term "collectible" means an item
described in paragraphs (A) through (D) of section 408 (m)(2)
(determined without regard to section 408 (m)(3) of title 26 of the
United States Code).

\(4\) [Travel or entertainment activity]{.underline}. The term "travel
or entertainment activity" means an item of travel or entertainment
(within the meaning of 26 CFR § 1.274-2(b)(1)) pertaining to a single
trip or event where the aggregate sales price of the item and all other
items pertaining to the same trip or event that are sold in the same
transaction (or related transactions) exceeds \$10,000.

\(5\) [Retail sale]{.underline}. The term "retail sale" means any sale
(whether for resale or for any other purpose) made in the course of a
trade or business if that trade or business principally consists of
making sales to ultimate consumers.

\(6\) [Trade or business]{.underline}. The term "trade or business" has
the same meaning as under section 162 of title 26, United States Code.

\(7\) [Transaction]{.underline} \-- (i) Solely for purposes of section
5331 and this section, the term "transaction" means the underlying event
precipitating the payer's transfer of currency to the recipient. In this
context, transactions include (but are not limited to) a sale of goods
or services; a sale of real property; a sale of intangible property; a
rental of real or personal property; an exchange of currency for other
currency; the establishment or maintenance of or contribution to a
custodial, trust, or escrow arrangement; a payment of a preexisting
debt; a conversion of currency to a negotiable instrument; a
reimbursement for expenses paid; or the making or repayment of a loan. A
transaction may not be divided into multiple transactions in order to
avoid reporting under this section.

\(ii\) The term "related transactions" means any transaction conducted
between a payer (or its agent) and a recipient of currency in a 24-hour
period. Additionally, transactions conducted between a payer (or its
agent) and a currency recipient during a period of more than 24 hours
are related if the recipient knows or has reason to know that each
transaction is one of a series of connected transactions.

\(iii\) The following examples illustrate the definition of paragraphs
(c)(7) (i) and (ii).

[Example 1]{.underline}. A person has a tacit agreement with a gold
dealer to purchase \$36,000 in gold bullion. The \$36,000 purchase
represents a single transaction under paragraph (c)(7)(i) of this
section and the reporting requirements of this section cannot be avoided
by recasting the single sales transaction into 4 separate \$9,000 sales
transactions.

[Example 2]{.underline}. An attorney agrees to represent a client in a
criminal case with the attorney's fee to be determined on an hourly
basis. In the first month in which the attorney represents the client,
the bill for the attorney's services comes to \$8,000 which the client
pays in currency. In the second month in which the attorney represents
the client, the bill for the attorney's services comes to \$4,000, which
the client again pays in currency. The aggregate amount of currency paid
(\$12,000) relates to a single transaction as defined in paragraph
(c)(7)(i) of this section, the sale of legal services relating to the
criminal case, and the receipt of currency must be reported under this
section.

[Example 3]{.underline}. A person intends to contribute a total of
\$45,000 to a trust fund, and the trustee of the fund knows or has
reason to know of that intention. The \$45,000 contribution is a single
transaction under paragraph (c)(7)(i) of this section and the reporting
requirement of this section cannot be avoided by the grantor's making
five separate \$9,000 contributions of currency to a single fund or by
making five \$9,000 contributions of currency to five separate funds
administered by a common trustee.

[Example 4]{.underline}. K, an individual, attends a one day auction and
purchases for currency two items, at a cost of \$9,240 and \$1,732.50
respectively (tax and buyer's premium included). Because the
transactions are related transactions as defined in paragraph (c)(7)(ii)
of this section, the auction house is required to report the aggregate
amount of currency received from the related sales (\$10,972.50), even
though the auction house accounts separately on its books for each item
sold and presents the purchaser with separate bills for each item
purchased.

[Example 5]{.underline}. F, a coin dealer, sells for currency \$9,000
worth of gold coins to an individual on three successive days. Under
paragraph (c)(7)(ii) of this section the three \$9,000 transactions are
related transactions aggregating \$27,000 if F knows, or has reason to
know, that each transaction is one of a series of connected
transactions.

\(8\) [Recipient]{.underline}. (i) The term "recipient" means the person
receiving the currency. Except as provided in paragraph (c)(8)(ii) of
this section, each store, division, branch, department, headquarters, or
office ("branch") (regardless of physical location) comprising a portion
of a person's trade or business shall for purposes of this section be
deemed a separate recipient.

\(ii\) A branch that receives currency payments will not be deemed a
separate recipient if the branch (or a central unit linking such branch
with other branches) would in the ordinary course of business have
reason to know the identity of payers making currency payments to other
branches of such person.

\(iii\) [Examples]{.underline}. The following examples illustrate the
application of the rules in paragraphs (c)(8)(i) and (ii) of this
section:

[Example 1]{.underline}. N, an individual, purchases regulated futures
contracts at a cost of \$7,500 and \$5,000, respectively, through two
different branches of Commodities Broker X on the same day. N pays for
each purchase with currency. Each branch of Commodities Broker X
transmits the sales information regarding each of N's purchases to a
central unit of Commodities Broker X (which settles the transactions
against N's account). Under paragraph (c)(8)(ii) of this section the
separate branches of Commodities Broker X are not deemed to be separate
recipients; therefore, Commodities Broker X must report with respect to
the two related regulated futures contracts sales in accordance with
this section.

[Example 2]{.underline}. P, a corporation, owns and operates a
racetrack. P's racetrack contains 100 betting windows at which
pari-mutuel wagers may be made. R, an individual, places currency wagers
of \$3,000 each at five separate betting windows. Assuming that in the
ordinary course of business each betting window (or a central unit
linking windows) does not have reason to know the identity of persons
making wagers at other betting windows, each betting window would be
deemed to be a separate currency recipient under paragraph (c)(8)(i) of
this section. As no individual recipient received currency in excess of
\$10,000, no report need be made by P under this section.

\(d\) [Exceptions to the reporting requirements of section
5331]{.underline} \-- (1) [Receipt of currency by certain casinos having
gross annual gaming revenue in excess of \$1,000,000 -- (i) In
general]{.underline}. If a casino receives currency in excess of
\$10,000 and is required to report the receipt of such currency directly
to the Treasury Department under 31 CFR 103.22 (a)(2) and 103.25 and is
subject to the recordkeeping requirements of 31 CFR 103.36, then the
casino is not required to make a report with respect to the receipt of
such currency under section 5331 and this regulation.

\(ii\) [Casinos exempt under 31 CFR 103.55(c)]{.underline}. Pursuant to
31 CFR 103.55, the Secretary may exempt from the reporting and
recordkeeping requirements under 31 CFR 103.22, 103.25 and 103.36
casinos in any state whose regulatory system substantially meets the
reporting and recordkeeping requirements of 31 CFR part 103. Such
casinos shall not be required to report receipt of currency under
section 5331 and this regulation.

\(iii\) [Reporting of currency received in a nongaming
business]{.underline}. Nongaming businesses (such as shops, restaurants,
entertainment, and hotels) at casino hotels and resorts are separate
trades or businesses in which the receipt of currency in excess of
\$10,000 is reportable under section 5331 and these regulations. Thus, a
casino exempt under paragraph (d)(1)(i) or (ii) of this section must
report with respect to currency in excess of \$10,000 received in its
nongaming businesses.

\(iv\) [Example]{.underline}. The following example illustrates the
application of the rules in paragraphs (d)(2) (i) and (iii) of this
section:

[Example]{.underline}. A and B are casinos having gross annual gaming
revenue in excess of \$1,000,000. C is a casino with gross annual gaming
revenue of less than \$1,000,000. Casino A receives \$15,000 in currency
from a customer with respect to a gaming transaction which the casino
reports to the Treasury Department under 31 CFR 103.22(a)(2) and 103.25.
Casino B receives \$15,000 in currency from a customer in payment for
accommodations provided to that customer at Casino B's hotel. Casino C
receives \$15,000 in currency from a customer with respect to a gaming
transaction. Casino A is not required to report the transaction under
section 5331 or these regulations because the exception for certain
casinos provided in paragraph (d)(1)(i) ("the casino exception")
applies. Casino B is required to report under section 5331 and these
regulations because the casino exception does not apply to the receipt
of currency from a nongaming activity. Casino C is required to report
under section 5331 and these regulations because the casino exception
does not apply to casinos having gross annual gaming revenue of
\$1,000,000 or less which do not have to report to the Treasury
Department under 31 CFR 103.22(a)(2) and 103.25.

\(2\) [Receipt of currency not in the course of the recipient's trade or
business]{.underline}. The receipt of currency in excess of \$10,000 by
a person other than in the course of the person's trade or business is
not reportable under section 5331. Thus, for example, F, an individual
in the trade or business of selling real estate, sells a motorboat for
\$12,000, the purchase price of which is paid in currency. F did not use
the motorboat in any trade or business in which F was engaged. F is not
required to report under section 5331 or this section because the
exception provided in this paragraph (d)(2) applies.

\(3\) [Receipt is made with respect to a foreign currency
transaction]{.underline} \-- (i) [In general]{.underline}. Generally,
there is no requirement to report with respect to a currency transaction
if the entire transaction occurs outside the United States (the fifty
states and the District of Columbia). An entire transaction consists of
both the transaction as defined in paragraph (c)(7)(i) of this section
and the receipt of currency by the recipient. If, however, any part of
an entire transaction occurs in the Commonwealth of Puerto Rico or a
possession or territory of the United States and the recipient of
currency in that transaction is subject to the general jurisdiction of
the Internal Revenue Service under title 26 of the United States Code,
the recipient is required to report the transaction under this section.

\(ii\) [Example]{.underline}. The following example illustrates the
application of the rules in paragraph (d)(3)(i) of this section:

[Example]{.underline}. W, an individual engaged in the trade or business
of selling aircraft, reaches an agreement to sell an airplane to a U.S.
citizen living in Mexico. The agreement, no portion of which is
formulated in the United States, calls for a purchase price of \$125,000
and requires delivery of and payment for the airplane to be made in
Mexico. Upon delivery of the airplane in Mexico, W receives \$125,000 in
currency. W is not required to report under section 5331 or this section
because the exception provided in paragraph (d)(3)(i) of this section
("foreign transaction exception") applies. If, however, any part of the
agreement to sell had been formulated in the United States, the foreign
transaction exception would not apply and W would be required to report
the receipt of currency under section 5331 and this section.

\(e\) [Time, manner, and form of reporting]{.underline} \-- (1) The
reports required by paragraph (a) of this section must be made by filing
a Form 8300, as specified in 26 CFR 1.6050I-1(e)(2). The reports must be
filed at the time and in the manner specified in 26 CFR
1.6050I-1(e)(1)&(3) respectively.

\(2\) [Verification]{.underline}. A person making a report of
information under this section must verify the identity of the person
from whom the reportable currency is received. Verification of the
identity of a person who purports to be an alien must be made by
examination of such person's passport, alien identification card, or
other official document evidencing nationality or residence.
Verification of the identity of any other person may be made by
examination of a document normally acceptable as a means of
identification when cashing or accepting checks (for example, a driver's
license or a credit card). In addition, a report will be considered
incomplete if the person required to make a report knows (or has reason
to know) that an agent is conducting the transaction for a principal,
and the return does not identify both the principal and the agent.

\(3\) [Retention of reports]{.underline}. A person required to make a
report under this section must keep a copy of each report filed for five
years from the date of filing.

Dated: \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

James F. Sloan,

Director,

Financial Crimes Enforcement

Network

[^1]: Language expanding the scope of the Bank Secrecy Act to
    intelligence or counter-intelligence activities to protect against
    international terrorism was added by Section 358 of the USA Patriot
    Act of 2001.