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June 10, 2008

Financial Crimes Enforcement Network

Department of the Treasury

P. O. Box 39

Vienna, Virginia 22183

ATTN: ***Currency Transaction Report Exemptions Rule and Form
Amendments***

Ladies and Gentlemen,

On behalf of First Citizens Bank and Trust Company, Inc., thank you for
the opportunity to provide my comments on FinCEN's Notice of Proposed
Rulemaking -- Proposed Amendments to the Bank Secrecy Act Regulations --
Exemptions From the Requirement To Report Transactions in Currency.

Within my comments, I have expressed some specific concerns, which I
hope you will consider and find helpful in making changes to the
proposal.

Again, thank you for this opportunity.

Sincerely,

Wanda LeBlanc

BSA Officer

First Citizens Bank and Trust Company, Inc.

**Attention: Currency Transaction Report Exemptions Rule and Form
Amendments**

**Comment on FR Doc #E8-08955**

**IV. Request for Comment**

***A. Removing The Regulatory Requirement That Depository Institutions
File Exemption Forms, And Annually Review The Supporting Information For
Banks, Federal, State, And Local Government Agencies, And Entities
Exercising Federal, State, Or Local Government Authority***

 *Will this proposal encourage depository institutions to avail
themselves of Phase I exemptions for customers who are depository
institutions, federal, state, and local government agencies, and
entities exercising federal, state or local governmental authority, and
if not, why?*

**COMMENT:** Removal of the requirements to file exemption forms and
annually review those entities named would greatly benefit financial
institutions and should encourage the institutions to avail themselves
of these Phase I exemptions.

***B. Removing The Regulatory Requirement That Depository Institutions
Biennially Renew Phase II Exemptions***

 *With the removal of the biennial requirement to renew a designation
for certain eligible*

*Phase I and Phase II customers, should depository institutions be
required to file a revocation of exemption if they choose to no longer
exempt an otherwise eligible customer?*

**COMMENT:** No, because I feel this would be needless paperwork.
Financial institutions should continue as they do today under the
directive indicated on Form 110, which is "A bank may, but is not
required to, use this form to notify the Treasury that the bank has
revoked the designation of a customer as an exempt person." This
practice has apparently worked for many years and should continue to
work. When and if a customer is removed from exempt status, one of two
things will happen. Either the bank will begin submitting CTRs (if
reportable transactions occur); or, no CTRs are filed because either the
account(s) has closed or the customer no longer conducts large currency
transactions. Either way, the government gets the information it needs
if there are large currency transactions or doesn't get information it
does not need if there are no reportable transactions. The submitting of
a revocation would not play a useful role in this process; therefore, I
feel it's a needless step. The only thing a requirement to submit would
do is give examiners another item for which they could invoke a
violation if a bank accidentally forgets to file the revocation. The
fear of this type violation could dissuade banks from exercising the
practice of exempting customers, which is contrary to the intent of
these proposed enhancements.

Post Script: I was unsure as to why the biennial requirement is
mentioned in association with Phase I customers since Phase I customers
are not subject to biennial renewal. Is this simply a misstatement?

***B. Removing The Regulatory Requirement That Depository Institutions
Biennially Renew Phase II Exemptions - continued***

 *Should depository institutions be required to renew information
regarding a change of control of a Phase II exempt customer once every
two years, or should the requirement be that modified and updated change
of control information must be filed within 30 days of the depository
institution becoming aware of the change?*

**COMMENT:** Actually, I suggest neither. Banks should not be required
to "renew" change-of-control information because it does not appear to
be of any use now, why continue the practice. All that occurs now is the
"checking of a box" on Form 110. Nothing is recorded to indicate what
the change-in-control constitutes. In fact, nothing appears anywhere in
the regulation that defines what this terminology truly means. When
asked of FinCEN what it means, the response was that it is "what a
state's law says it is." So, with what could possibly be 50 different
interpretations, and more added for "self interpretations;" and the fact
that nothing is entered on Form 110 to indicate what the
change-in-control constitutes, this information simply could not be of
any value. Either an entity is exemptible or not exemptible; and, for
those that are exempted, an annual review is required. With examiners
reviewing exemptions annually, any problems would be discovered. I have
yet to be asked by examiners about change-in-control information, which
again is undefined. Why send in a Form to renew information that has no
basic usage?

Several issues **[IF]{.underline}** the change-in-control requirement
remains:

-   FinCEN would need to provide a [specific definition]{.underline} for
    the "change-in-control" terminology (not referencing "state law"),
    and give an adequate number of examples.

-   If the "once every two years" timeframe is adopted, FinCEN might as
    well continue with the biennial renewal requirement because it would
    basically amount to the same thing.

-   If the "30-day" time frame is adopted, adherence would be extremely
    difficult and could very well create a monitoring nightmare.
    Firstly, the 30-day clock would start ticking when the "depository
    institution becomes aware." Since the all encompassing term
    "depository institution" translates into all employees, the
    requirement would mean that if any one employee becomes "aware" of a
    change of control (presently, undefined), a filing must be made
    within 30 days. If the newly-aware employee is not the BSA Officer,
    he/she would have to immediately inform the BSA Officer to file so
    as not to violate the 30-day requirement. This process would put a
    BSA Officer in the situation of having to heavily rely on fellow
    employees' accuracy and/or timeliness. A BSA Officer, who is
    ultimately responsible for adhering to the requirement, should never
    be placed in such a vulnerable, uncontrollable position. The only
    alternative, which would be incredibly burdensome, would be for the
    BSA Officer to monitor each Phase II exemption [monthly]{.underline}
    (so as to meet the 30-day time frame) to determine if a change of
    control (presently, undefined) has occurred. This would not only be
    incredibly burdensome, it may even be prohibitive depending on the
    number of Phase II exemptions.

 *Will this proposal encourage depository institutions to avail
themselves of Phase II exemptions, and if not, why?*

**COMMENT:** No, I definitely feel it will not [if]{.underline} either
requirement is adopted. The reasoning for this assertion is explained in
the above (two) responses.

***C. Permitting Depository Institutions to Exempt Otherwise Eligible
Phase II Customers Who Frequently Engage In Large Cash Transactions
within a Period of Time Shorter Than 12 Months***

 *Is it preferable to adopt a regulatory requirement that depository
institutions only conduct a risk-based analysis of an otherwise eligible
Phase II customer with no prescribed amount of time before a depository
institution would be permitted to file an initial designation of
exemption? Or, is it preferable to adopt a generally recommended minimum
amount of time before an initial designation of exemption could be
filed?*

**COMMENT:** Adopt a "minimum" time frame, because it removes subjective
interpretation by the BSA Officer and examiners. Also, it gives a BSA
Officer something definitive to point to when he/she is being pressured
by a management-level associate to immediately exempt a new customer.

Major consideration **[if]{.underline}** the "risk-based" approach is
adopted: In order to remove as much subjective interpretation as
possible, FinCEN would need to specifically define what it expects the
"analysis" to consist of, to include addressing the issue of a minimum
number of large currency transactions that must occur. FinCEN could
provide a questionnaire for use by BSA Officers. Examiners would then be
able to use the questionnaire as review criteria and if completed
properly, mark the analysis requirement as having been met.

 *If those commenting prefer that FinCEN state a generally recommended
minimum amount of time that should pass before a depository institution
exempts a Phase II customer, is two months an appropriate amount of
time? Why?*

**COMMENT:** In some cases, two months may be an adequate amount of time
to determine the true cash pattern of a new customer, but in other
cases, it may not be; therefore, it is recommended that the time frame
be at least 3 months or 6 months.

 *FinCEN currently defines "frequently" as eight or more reportable
transactions per annum in guidance that interprets the regulatory
requirements for Phase II exemption procedures. Given the proposed
changes in this notice, is eight still an appropriate number of
reportable transactions to deem a customer eligible for exemption?*

**COMMENT:** Specifically regarding eight transactions per annum being
an appropriate number, I feel it is and is easily relatable to activity
reviewed for a 12-month period, as when an annual review is conducted on
an existing Phase II exemption. However, FinCEN will need to provide
guidance on how to apply a "per annum" figure to a shortened waiting
period for exemption; OR, FinCEN will need to give a specific number of
transactions that must occur during the shortened waiting period.

 *Will this proposal encourage depository institutions to avail
themselves of Phase II exemptions, and if not, why?*

**COMMENT:** It can, depending on which of the recommendations are
ultimately adopted.

**RECOMMENDATION FOR PROCESS (as presented in simple terminology):**

**For banks, federal, state and local government agencies, and entities
exercising federal, state or local government authority** -- No
requirement to file exemption form; no requirement to conduct annual
review. If financial institution wishes to retain a listing of entities
and/or code entities for in-house processing systems, they may (but are
not required to) do so.

**Phase I entities will continue to consist of listed entities and
subsidiaries of listed entities** - Required to file Form 110 for
initial designation as Phase I exemption; required to conduct annual
review to determine if remain listed entity or subsidiary of listed
entity; no requirement to file revocation should exempt status be
terminated.

**Phase II entities will continue to consist of non-listed businesses
and payroll customers** - Required to file Form 110 for initial
designation as Phase II exemption; required to conduct annual review to
determine if entity continues to engage in large currency transactions
of at least 8 per annum; no requirement to file revocation should exempt
status be terminated.

**Ineligible businesses remain as currently described.**