jlentini on DSKJ8SOYB1PROD with RULES

Federal Register / Vol. 75, No. 71 / Wednesday, April 14, 2010 / Rules and Regulations 19241 

Epidemiology & Statistics Unit, Research and 

Scientific Affairs, January 2009. 

10. Mannino, D. M. et al., ‘‘Surveillance for 

Asthma—United States, 1980–1999,’’ 

Morbidity and Mortality Weekly Report, 

51(SS01):1–13, March 29, 2002. 

11. Analysis completed by FDA based on 

information provided by IMS Health, IMS 

National Sales Perspective (TM), 2009, 

extracted September 2009. These data can be 

purchased from IMS Health. Please send all 

inquiries to: IMS Health, Attn: Brian 

Palumbo, Account Manager, 660 West 

Germantown Pike, Plymouth Meeting, PA 

19462. 

12. Rozek, R. P., and E. R. Bishko, 

‘‘Economic Issues Raised in the FDA’s 

Proposed Rule on Removing the EssentialUse Designation for Albuterol MDIs,’’ 

National Economic Research Associates, 

August 13, 2004 (FDA Docket No. 2003P– 

0029/C25). 

13. Hendeles, L. G, L. Colice, and R. J. 

Meyer, ‘‘Withdrawal of Albuterol Inhalers 

Containing Chlorofluorocarbon Propellants,’’ 

New England Journal of Medicine, 356:1344– 

1351, March 29, 2007. 

14. Goldman, D. P. et al., ‘‘Pharmacy 

Benefits and the Use of Drugs by the 

Chronically Ill,’’ The Journal of the American 

Medical Association, 291:2344–2350, May 

19, 2004. 

15. DeNavas-Walt, C., B. D. Proctor, and J. 

C. Smith, U.S. Census Bureau, Current 

Population Reports, P60–236(RV), Income, 

Poverty, and Health Insurance Coverage in 

the United States: 2008, Table 7, p. 21, 2009. 

List of Subjects in 21 CFR Part 2 

Administrative practice and 

procedure, Cosmetics, Drugs, Foods. 

■ Therefore, under the Federal Food, 

Drug, and Cosmetic Act and the Clean 

Air Act and under authority delegated 

to the Commissioner of Food and Drugs, 

after consultation with the 

Administrator of the Environmental 

Protection Agency, 21 CFR part 2 is 

amended as follows: 

PART 2—GENERAL ADMINISTRATIVE 

RULINGS AND DECISIONS 

■ 1. The authority citation for 21 CFR 

part 2 continues to read as follows: 

Authority: 15 U.S.C. 402, 409; 21 U.S.C. 

321, 331, 335, 342, 343, 346a, 348, 351, 352, 

355, 360b, 361, 362, 371, 372, 374; 42 U.S.C. 

7671 et seq. 

§ 2.125 [Amended] 

■ 2. Effective June 14, 2010, in § 2.125, 

remove and reserve paragraphs (e)(2)(iii) 

and (e)(4)(vii). 

§ 2.125 [Amended] 

■ 3. Effective December 31, 2010, in 

§ 2.125, remove and reserve paragraphs 

(e)(1)(v) and (e)(4)(iv). 

§ 2.125 [Amended] 

■ 4. Effective June 30, 2011, in § 2.125, 

remove and reserve paragraph (e)(1)(iii). 

§ 2.125 [Amended] 

■ 5. Effective December 31, 2013, in 

§ 2.125, remove and reserve paragraphs 

(e)(2)(iv) and (e)(4)(viii). 

Dated: April 8, 2010. 

Leslie Kux, 

Acting Assistant Commissioner for Policy. 

[FR Doc. 2010–8467 Filed 4–13–10; 8:45 am] 

BILLING CODE 4160–01–S 

DEPARTMENT OF THE TREASURY 

31 CFR Part 103 

RIN 1506–AA93 

Financial Crimes Enforcement 

Network; Amendment to the Bank 

Secrecy Act Regulations; Defining 

Mutual Funds as Financial Institutions. 

AGENCY: Financial Crimes Enforcement 


Network (‘‘FinCEN’’), Treasury. 


ACTION: Final rule. 


SUMMARY: FinCEN is issuing this final 

rule to include mutual funds within the 

general definition of ‘‘financial 

institution’’ in regulations implementing 

the Bank Secrecy Act (‘‘BSA’’). The final 

rule subjects mutual funds to rules 

under the BSA on the filing of Currency 

Transaction Reports (‘‘CTRs’’) and on the 

creation, retention, and transmittal of 

records or information for transmittals 

of funds. Additionally, the final rule 

amends the definition of mutual fund in 

the rule requiring mutual funds to 

establish anti-money laundering 

(‘‘AML’’) programs. The amendment 

harmonizes the definition of mutual 

fund in the AML program rule with the 

definitions found in the other BSA rules 

to which mutual funds are subject. 

Finally, the final rule amends the rule 

that delegates authority to examine 

institutions for compliance with the 

BSA. The amendment makes it clear 

that FinCEN has not delegated to the 

Internal Revenue Service the authority 

to examine mutual funds for compliance 

with the BSA, but rather to the U.S. 

Securities and Exchange Commission 

(‘‘SEC’’) as the federal functional 

regulator of mutual funds. 

DATES: Effective Date: This rule is 

effective May 14, 2010. 

Compliance Date: Mutual funds must 

comply with 31 CFR 103.33 by January 

10, 2011. The compliance date for all 

other aspects of this rulemaking is the 

same as the effective date. 

FOR FURTHER INFORMATION CONTACT: The 

FinCEN regulatory helpline at (800) 

949–2732 and select Option 6. 

SUPPLEMENTARY INFORMATION: 

I. Background 

A. Statutory Provisions. 

The Bank Secrecy Act, Public Law 

91–508, codified as amended at 12 

U.S.C. 1829b, 12 U.S.C. 1951–1959, and 

31 U.S.C. 5311–5314; 5316–5332, 

authorizes the Secretary of the Treasury 

(‘‘Secretary’’) 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 investigations or proceedings, 

or in the conduct of intelligence or 

counter-intelligence activities, including 

analysis, to protect against international 

terrorism, and to implement anti-money 

laundering programs and compliance 

procedures.1 Regulations implementing 

the BSA appear at 31 CFR part 103. The 

authority of the Secretary to administer 

the BSA has been delegated to the 

Director of FinCEN. 

The definition of ‘‘financial 

institution’’ in the BSA includes 

investment companies.2 The Investment 

Company Act of 1940, codified at 15 

U.S.C. 80a–1 et seq. (the ‘‘Investment 

Company Act’’), defines ‘‘investment 

company’’ 3 and subjects investment 

companies to regulation by the SEC. 

B. Overview of Current Regulatory 

Provisions. 

Regulations implementing the BSA 

currently apply only to investment 

companies that are ‘‘open-end 

companies,’’ as the term is defined in 

the Investment Company Act. More 

commonly known as mutual funds, 

open-end companies are the 

predominant type of investment 

company. Open-end companies are 

management companies that offer or 

have outstanding securities that are 

redeemable at net asset value.4 

Although FinCEN has issued 

individual rules that apply to mutual 

funds,5 FinCEN has not included 

1 Language expanding the scope of the BSA was 

added by the Uniting and Strengthening America by 

Providing Appropriate Tools Required to Intercept 

and Obstruct Terrorism Act of 2001 (‘‘USA 

PATRIOT Act’’), Public Law 107–56. 

2 31 U.S.C. 5312(a)(2)(I). 

3 See 15 U.S.C. 80a–3. 

4 15 U.S.C. 80a–4; 15 U.S.C. 80a–5(a)(1); 15 U.S.C. 

80a–2(a)(32). Face-amount certificate companies 

and unit investment trusts are excluded from the 

definition of ‘‘management company.’’ 15 U.S.C. 

80a–4(3). 

5 Anti-Money Laundering Programs for Mutual 

Funds, 67 FR 21117 (April 29, 2002); Customer 

Identification Programs for Mutual Funds, 68 FR 

25131 (May 9, 2003); Amendment to the Bank 

Secrecy Act Regulations—Requirement That Mutual 

Funds Report Suspicious Activity, 71 FR 26213 

(May 4, 2006); Anti-Money Laundering Programs; 

Special Due Diligence Programs for Certain Foreign 

Accounts, 71 FR 496 (Jan. 4, 2006); Anti-Money 

Continued 

jlentini on DSKJ8SOYB1PROD with RULES

19242 Federal Register / Vol. 75, No. 71 / Wednesday, April 14, 2010 / Rules and Regulations 

mutual funds within the definition of 

‘‘financial institution’’ at 31 CFR 

103.11(n), which is less inclusive than 

the definition in the BSA itself.6 The 

definition of ‘‘financial institution’’ at 31 

CFR 103.11(n) determines, among other 

things, the scope of rules that require 

the filing of CTRs and the creation, 

retention, and transmittal of records or 

information on transmittals of funds and 

other specified transactions.7 

II. Notice of Proposed Rulemaking and 

Comments 

On June 5, 2009, FinCEN published a 

notice of proposed rulemaking (the 

‘‘Notice’’) that proposed including 

mutual funds within the general 

definition of financial institution at 31 

CFR 103.11(n).8 The proposed rule 

would subject mutual funds to rules on 

the filing of CTRs and on the creation, 

retention, and transmittal of records or 

information for transmittals of funds.9 

The comment period for the Notice 

ended on September 3, 2009. FinCEN 

received three comment letters from 

various industry associations.10 All of 

the commenters supported the proposed 

rule and offered many reasons why 

including mutual funds within the 

definition of ‘‘financial institution’’ at 31 

CFR 103.11(n) is appropriate. These 

reasons are discussed below in greater 

detail in the section-by-section analysis. 

All of the commenters requested 

additional time to comply with the 

Recordkeeping and Travel Rule 

requirements that would be imposed 

under 31 CFR 103.33. 

III. Section-by-Section Analysis 

A. Sections 103.11(n)(10) and 

103.11(ccc)—Mutual Funds Move From 

Filing Reports on Form 8300 to the 

Currency Transaction Report 

The final rule adds mutual funds to 

the definition of ‘‘financial institution’’ 

at 31 CFR 103.11(n)(10). The final rule 

defines a ‘‘mutual fund’’ for this purpose 

at 31 CFR 103.11(ccc). The definition of 

Laundering Programs; Special Due Diligence 

Programs for Certain Foreign Accounts, 72 FR 

44768 (Aug. 9, 2007). 

6 See 31 U.S.C. 5312(a)(2). 

7 See 31 CFR 103.22; 31 CFR 103.28; 31 CFR 

103.29; 31 CFR 103.33; and 31 CFR 103.38. Defining 

a business as a financial institution would make the 

business ineligible for exemption from a bank’s 

requirement to file CTRs with respect to the 

business’ large cash transactions. See 31 CFR 

103.22(d)(5)(viii). 

8 Amendment to the Bank Secrecy Regulations; 

Defining Mutual Funds as Financial Institutions, 74 

FR 26996 (June 5, 2009). 

9 See 31 CFR 103.22; 31 CFR 103.28; 31 CFR 

103.29; 31 CFR 103.33; and 31 CFR 103.38. 

10 All comments to the Notice are available for 

public viewing at http://www.regulations.gov or 

http://www.fincen.gov/statutes_regs/bsa/ 

regs_proposal_comment.html. 

‘‘mutual fund’’ covers only those entities 

registered or required to register with 

the SEC. Specifically, ‘‘mutual fund’’ is 

defined as: 

an ‘‘investment company’’ (as the term is 

defined in section 3 of the Investment 

Company Act (15 U.S.C. 80a–3)) that is an 

‘‘open-end company’’ (as that term is defined 

in section 5 of the Investment Company Act 

(15 U.S.C. 80a–5)) registered or required to 

register with the Securities and Exchange 

Commission under section 8 of the 

Investment Company Act (15 U.S.C. 80a–8). 

There were no comments concerning 

the definition of mutual fund. FinCEN 

is adopting the definition as proposed. 

The final rule has the effect of 

replacing a mutual fund’s requirement 

to file a Form 8300 with a requirement 

to file a CTR under 31 CFR 103.22.11 A 

mutual fund will now be required to file 

a CTR for a transaction involving a 

transfer of more than $10,000 in 

currency by, through, or to the mutual 

fund.12 The CTR filing obligation covers 

incoming, outgoing, and exchange 

transactions in currency. The definition 

of ‘‘currency’’ for purposes of the CTR 

rule is different from and less inclusive 

than the definition of ‘‘currency’’ in the 

Form 8300 rule.13 Under the CTR rule, 

a financial institution must treat 

multiple transactions as a single 

transaction if the financial institution 

has knowledge that the transactions are 

conducted by or on behalf of the same 

person.14 

In the Notice, FinCEN asserted that 

the volume of Form 8300s filed is 

relatively low when compared to the 

overall volume of mutual fund 

transactions.15 Commenters also 

concurred with FinCEN that since 

mutual funds are subject to SAR 

reporting requirements, the ability to 

11 31 CFR 103.30(a)(1)(ii) (the requirement to file 

a Form 8300 does not apply to transactions reported 

under 31 CFR 103.22). 

12 31 CFR 103.22(b)(1). 

13 See 31 CFR 103.11(h) (currency is defined as 

the coin and paper of the United States or of any 

other country that is designated as legal tender and 

that circulates and is customarily used as a medium 

of exchange in a foreign country). 

14 31 CFR 103.22(c)(2). The obligation to file a 

CTR is conditioned on knowledge that the 

transactions are conducted by or on behalf of the 

same person and result in either cash in or cash out 

totaling more than $10,000 during any one business 

day. The threshold in 31 CFR 103.22 applies to 

transactions conducted during a single business 

day, whereas the requirement to file a Form 8300 

can cover transactions that occur over a longer 

period of time. See 31 CFR 103.22(c)(2) and 31 CFR 

103.30(c)(12)(ii). 

15 A review of BSA data revealed that while 

hundreds of millions of transactions involving 

mutual funds were conducted in calendar years 

2004, 2005, 2006, and 2007, fewer than 19,500 

Form 8300s were filed by mutual funds over the 

same period. 

report suspicious transactions on a 

Form 8300 is redundant.16 

In the Notice, FinCEN requested 

comment on the anticipated time and 

monetary savings that could result from 

replacing the requirement to file reports 

on Form 8300 with a requirement to file 

CTRs. One commenter stated that 

requiring mutual funds to file CTRs 

instead of Form 8300s would streamline 

and reduce overall compliance burdens 

for mutual funds and could aid in 

facilitating enterprise-wide risk 

management programs. Commenters 

were in agreement that requiring mutual 

funds to file CTRs instead of Form 

8300s should reduce the expense and 

burden of reporting for mutual funds 

and their transfer agents,17 and one 

commenter stated that there likely will 

be greater efficiency in larger entities 

that have staff and systems in place to 

produce CTR filings. 

FinCEN also requested comment on 

the nature, volume, content, and value 

of any potentially lost information to 

law enforcement, tax, regulatory, and 

counter-terrorism investigations or 

activities that could result from this 

rulemaking. FinCEN did not receive any 

comments specific to this request. One 

commenter, however, stated generally 

that requiring mutual funds to file CTRs, 

rather than Form 8300s, would not 

diminish the quality or quantity of 

useful BSA data reported by mutual 

funds. 

B. Section 103.33—The Recordkeeping 

and Travel Rule and Related 

Recordkeeping Requirements 

The final rule subjects mutual funds 

to requirements on the creation and 

retention of records for transmittals of 

funds, and the requirement to transmit 

16 FinCEN also offered that because mutual funds 

rarely receive from or disburse to shareholders 

significant amounts of currency, mutual funds are 

not as likely as depository institutions to be used 

during the initial ‘‘placement’’ stage of the money 

laundering process. Amendment to the Bank 

Secrecy Act Regulations; Defining Mutual Funds as 

Financial Institutions, 74 FR 26,996, 26998 (June 5, 

2009). Two commenters agreed with FinCEN. A 

third commenter stated that the terms and 

conditions of the mutual fund account, rather than 

the type of financial institution offering such 

product, is more likely to determine whether a 

mutual fund can be used to place illicit funds in 

the financial system. 

17 FinCEN has recognized the role of transfer 

agents in performing BSA compliance functions. 

See e.g., 67 FR 2117, (April 29, 2002) (adopting 

release for mutual fund Anti-Money Laundering 

Program rule), 68 FR 25131, (May 9, 2003) 

(adopting release for mutual fund Customer 

Identification Program rule), 71 FR 26213, (May 4, 

2006) (adopting release for mutual fund SAR rule). 

Many mutual funds contractually delegate their 

BSA compliance functions, including 

recordkeeping, to transfer agents, although the 

mutual fund remains responsible under the BSA for 

ensuring compliance. 

jlentini on DSKJ8SOYB1PROD with RULES

Federal Register / Vol. 75, No. 71 / Wednesday, April 14, 2010 / Rules and Regulations 19243 

information on these transactions to 

other financial institutions in the 

payment chain (‘‘Recordkeeping and 

Travel Rule’’).18 The Recordkeeping and 

Travel Rule applies to transmittals of 

funds in amounts that equal or exceed 

$3,000,19 and requires the transmittor’s 

financial institution to obtain and retain 

name, address, and other information on 

the transmittor and the transaction.20 

Furthermore, the Recordkeeping and 

Travel Rule requires the recipient’s 

financial institution—and in certain 

instances, the transmittor’s financial 

institution—to obtain or retain 

identifying information on the 

recipient.21 The Recordkeeping and 

Travel Rule requires that certain 

information obtained or retained by the 

transmittor’s financial institution 

‘‘travel’’ with the transmittal order 

through the payment chain.22 

FinCEN will adopt as proposed the 

inclusion of mutual funds within an 

existing exception designed to exclude 

from the Recordkeeping and Travel 

Rule’s coverage funds transfers or 

transmittal of funds in which certain 

categories of financial institution are the 

transmittor, originator, recipient, or 

beneficiary.23 Additionally, the final 

rule subjects mutual funds to 

requirements on the creation and 

retention of records for extensions of 

credit and cross-border transfers of 

currency, monetary instruments, checks, 

investment securities, and credit.24 

These requirements apply to 

transactions in amounts exceeding 

$10,000. 

Mutual funds are subject to record 

retention requirements under the 

18 See 31 CFR 103.33(f) and (g). Financial 

institutions must retain records for a period of five 

years. 31 CFR 103.38(d). 19 Rules under the BSA define a ‘‘transmittal of 

funds’’ and the persons or institutions involved in 

a ‘‘transmittal of funds.’’ See 31 CFR 103.11(d), (e), 

(q), (r), (s), (v), (w), (cc), (dd), (jj), (kk), (ll), and 

(mm). A ‘‘transmittal of funds’’ includes funds 

transfers processed by banks, as well as similar 

payments where one or more of the financial 

institutions processing the payment is not a bank. 

If the mutual fund is processing a payment sent by 

or to its customer, then the mutual fund would be 

either the ‘‘transmittor’s financial institution’’ or the 

‘‘recipient’s financial institution.’’ 

20 See 31 CFR 103.33(f)(1)(i) and (f)(2). 21 See 31 CFR 103.33(f)(3) (information that the 

recipient’s financial institution must obtain or 

retain). 22 See 31 CFR 103.33(g) (information that must 

‘‘travel’’ with the transmittal order); 31 CFR 

103.11(kk) (defining ‘‘transmittal order’’). 23 See 31 CFR 103.33(e)(6)(i) and 31 CFR 

103.33(f)(6)(i). The inclusion of mutual funds 

within the exceptions is intended to provide mutual 

funds with treatment similar to that of banks, 

brokers or dealers in securities, futures commission 

merchants, and introducing brokers in 

commodities. 

24 See 31 CFR 103.33(a)–(c). Financial institutions 

must retain these records for a period of five years. 

31 CFR 103.38(d). 

Investment Company Act, and mutual 

fund transfer agents are subject to 

recordkeeping requirements under the 

Securities Exchange Act of 1934.25 In 

light of these existing regulatory 

obligations, FinCEN stated in the Notice 

that the requirements of 31 CFR 103.33 

and 31 CFR 103.38 would have a de 

minimus impact on mutual funds and 

their transfer agents.26 Furthermore, 

rules under the BSA on the 

establishment of customer identification 

programs by mutual funds and on the 

reporting by mutual funds of suspicious 

transactions impose requirements to 

create and retain records.27 

FinCEN also requested comment on 

the anticipated impact of subjecting 

mutual funds to the requirements of the 

Recordkeeping and Travel Rule. All 

three commenters noted that subjecting 

mutual funds to the requirements of the 

Recordkeeping and Travel Rule will 

require mutual funds to implement 

changes to their transaction processing 

and recordkeeping systems. One 

commenter stated that the impact of the 

Recordkeeping and Travel Rule 

requirements on a mutual fund and its 

transfer agent may vary significantly, 

and that the impact will depend on such 

factors as the transaction processing and 

recordkeeping systems currently in 

place, the size of the mutual fund 

complex, and how the mutual fund 

shares are distributed. Other 

commenters stated that subjecting 

mutual funds to the requirements of the 

Recordkeeping and Travel Rule would 

have a greater impact on smaller mutual 

funds. 

All commenters requested additional 

time to comply with the Recordkeeping 

and Travel Rule. Such an extension 

would provide mutual funds with an 

opportunity to implement changes to 

their transaction reporting and 

recordkeeping systems. Generally, 

commenters suggested an extension of 

between 18 to 24 months. FinCEN has 

determined that extending the 

compliance date with respect to the 

requirements of the Recordkeeping and 

Travel Rule to 270 days after the rule is 

published in the Federal Register is 

appropriate. 

25 See, e.g., 15 U.S.C. 80a–30 (mutual funds); 15 

U.S.C. 78q(a)(3) (transfer agents). 

26 Amendment to Bank Secrecy Act Regulations; 

Defining Mutual Funds as Financial Institutions, 74 

FR 26996, 26998 (June 5, 2009). 

27 See 31 CFR 103.131 (mutual funds must obtain 

and record identifying information for persons 

opening new accounts, and verify the identity of 

persons opening new accounts); 31 CFR 103.15(c) 

(mutual funds must maintain records of 

documentation that supports the filing of a SAR). 

C. Section 103.130(a)—Amending the 

Definition of ‘‘Mutual Fund’’ in the AML 

Program Rule for Mutual Funds 

FinCEN is amending the definition of 

‘‘mutual fund’’ at 31 CFR 103.130(a) by 

including an explicit reference to openend companies ‘‘registered or required to 

register under section 8 of the 

Investment Company Act.’’ The 

amended definition of mutual fund 

harmonizes the definition in the antimoney laundering program rule with 

the definitions in the customer 

identification program rule for mutual 

funds, enhanced due diligence program 

rule for certain foreign accounts, and 

suspicious activity reporting rule for 

mutual funds.28 Rules requiring the 

establishment of customer identification 

and enhanced due diligence programs 

impose requirements that are 

programmatic in nature. It was 

FinCEN’s intent that the definition of 

‘‘mutual fund’’ at 31 CFR 103.130(a) 

include only those entities registered or 

required to register with the SEC. 

Paragraph (a) of section 103.130 will 

define a mutual fund as follows: 

an ‘‘investment company’’ (as the term is 

defined in section 3 of the Investment 

Company Act (15 U.S.C. 80a–3)) that is an 

‘‘open-end company’’ (as that term is defined 

in section 5 of the Investment Company Act 

(15 U.S.C. 80a–5)) registered or required to 

register with the Commission under section 

8 of the Investment Company Act (15 U.S.C. 

80a–8). 

D. Section 103.56(b)(8)—Excluding 

Mutual Funds From the Delegation of 

Examination Authority to the Internal 

Revenue Service 

FinCEN is amending 31 CFR 

103.56(b)(8) by including mutual funds 

within the list of financial institutions 

the Internal Revenue Service lacks the 

authority to examine for compliance 

with the BSA. The definition of ‘‘mutual 

fund’’ at 31 CFR 103.11(ccc) will apply 

to this provision. 

The SEC examines mutual funds for 

compliance with the Investment 

Company Act, and FinCEN has 

delegated to the SEC the authority to 

examine mutual funds for compliance 

with the BSA.29 The SEC has expertise 

in the operations of mutual funds and 

experience addressing the adequacy of 

mutual fund compliance programs. 

Mutual funds are subject to rules under 

the Investment Company Act that 

require the implementation of internal 

controls and other aspects of a 

28 31 CFR 103.130(a), 103.131(a)(5), 

103.175(f)(1)(x), 103.15(a). 

29 See 31 CFR 103.56(b)(6) (examination authority 

under the BSA is delegated to the SEC with respect 

to ‘‘investment companies,’’ as the term is defined 

in the Investment Company Act). 

jlentini on DSKJ8SOYB1PROD with RULES

19244 Federal Register / Vol. 75, No. 71 / Wednesday, April 14, 2010 / Rules and Regulations 

compliance program.30 Examinations by 

the Internal Revenue Service would 

result in duplication of effort and 

limited benefit in terms of increased 

compliance. 

IV. Notice and Comment Under the 

Administrative Procedure Act 

The Notice did not propose 

amendments to 31 CFR 103.130(a) and 

31 CFR 103.56(b)(8). Under the 

Administrative Procedure Act, notice of 

a proposed rulemaking is not required 

for ‘‘rules of agency organization, 

procedure, or practice,’’ or when the 

agency, for good cause, finds ‘‘that 

notice and public procedure thereon are 

impractical, unnecessary, or contrary to 

the public interest.’’ 31 The amendment 

to 31 CFR 103.56(b)(8) is a ‘‘rule of 

agency organization, procedure, or 

practice.’’ Furthermore, for the reasons 

stated above, FinCEN finds that 

publishing the amendments to 31 CFR 

103.130(a) and 31 CFR 103.56(b)(8) for 

comment is ‘‘unnecessary and contrary 

to the public interest.’’ 32 

V. Proposed Location in Chapter X 

In accordance with the November 7, 

2008 notice of proposed rulemaking 

pertaining to a restructuring of its 

regulations in a new chapter in the Code 

of Federal Regulations,33 FinCEN is 

separately proposing to remove Part 103 

of Chapter I of Title 31, Code of Federal 

Regulations, and add Parts 1000 to 1099 

(Chapter X). In the proposed Chapter X, 

the definition of mutual fund will be 

located at 1010.100(gg) and inserted into 

the definition of ‘‘financial institution’’ 

at 1010.100(t)(10). The planned 

reorganization would have no 

substantive effect on the final rule 

herein. The final rule herein would be 

renumbered according to the structure 

established via the finalization of the 

Chapter X rule. 

VI. Regulatory Flexibility Analysis 

Pursuant to the Regulatory Flexibility 

Act (‘‘RFA’’) (5 U.S.C. 601 et seq.), 

30 17 CFR 270.30a–3 (registered investment 

companies must implement disclosure controls, 

and procedures and internal controls over financial 

reporting.); 17 CFR 270.38a–1 (registered 

investment companies must implement written 

policies and procedures reasonably designed to 

ensure compliance with the federal securities laws). 

31 5 USC 553(b). 

32 For similar reasons, the amendment to 31 CFR 

103.56(b)(8) does not require analysis under the 

Regulatory Flexibility Act or analysis of major rule 

status under the Small Business Regulatory 

Enforcement Fairness Act. 5 USC 804(3)(C) (for 

purposes of Congressional review of agency 

rulemaking, the term ‘‘rule’’ does not include any 

rule of agency organization, procedure, or practice 

that does not substantially affect the rights or 

obligations of non-agency parties). 

33 Transfer and Reorganization of Bank Secrecy 

Act Regulations, 73 FR 66414 (Nov. 7, 2008). 

FinCEN certifies that the final rule will 

not have a significant economic impact 

on a substantial number of small 

entities. The economic impact of the 

final rule on small entities should not be 

significant. Mutual funds, regardless of 

their size, are already required to 

comply with many of the rules under 

the BSA that currently exist. While all 

mutual funds are captured under this 

rulemaking, the estimated burden 

associated with defining mutual funds 

as financial institutions is minimal. 

FinCEN believes that mutual funds 

rarely receive from or disburse to 

shareholders significant amounts of 

currency. As discussed above, FinCEN 

and commenters anticipate that moving 

mutual funds from a Form 8300 filing 

requirement to a CTR filing requirement 

will reduce the regulatory burden on all 

mutual funds. Finally, mutual funds are 

already subject to record retention 

requirements under the Investment 

Company Act, and mutual fund transfer 

agents are subject to recordkeeping 

requirements under the Securities 

Exchange Act of 1934. 

In the Notice, FinCEN requested 

comment on whether the proposed rule 

would have a significant economic 

impact on a substantial number of small 

entities. FinCEN received one letter 

commenting on FinCEN’s certification 

under the RFA. This commenter stated 

that the requirements of 31 CFR 103.33 

might have a significant economic 

impact on small mutual funds. The 

commenter noted that most of the larger 

mutual funds already have affiliations 

with other financial institutions and 

that these financial institutions have 

systems in place enabling mutual funds 

to achieve economies. The commenter 

suggested that FinCEN consider a 

phased-in requirement to allow smaller 

mutual funds additional time to comply 

with the requirements of 31 CFR 103.33. 

FinCEN believes that this rulemaking 

will not have a significant impact on a 

substantial number of small mutual 

funds. FinCEN, however, has 

determined that a delayed compliance 

date to allow all mutual funds to make 

changes to their recordkeeping and 

transaction reporting systems in order to 

comply with the requirements of 31 CFR 

103.33 is appropriate. FinCEN has, 

therefore, extended the compliance date 

with respect to the requirements of 31 

CFR 103.33 to 270 days after the rule is 

published in the Federal Register. 

VII. Executive Order 12866 

It has been determined that the final 

rule is not a ‘‘significant regulatory 

action’’ for purposes of Executive Order 

12866. Accordingly, a regulatory impact 

analysis is not required. 

VIII. Paperwork Reduction Act 

The collection of information 

contained in this final rule has been 

approved by the Office of Management 

and Budget in accordance with the 

Paperwork Reduction Act of 1995 (44 

U.S.C. 3507(d)) under control number 

1506–0004. Based on comments 

received the collection of information as 

required by 31 CFR 103.22 will likely 

reduce the reporting burden for mutual 

funds. Commenters did not state that 

the collection of information as required 

by 31 CFR 103.33 would result in an 

increased burden for mutual funds. 

Description of Affected Financial 

Institutions: ‘‘Mutual funds’’ as defined 

in 31 CFR 103.11(ccc). 

Estimated Number of Affected 

Financial Institutions: 8,029.34 

Estimated Average Annual Burden 

Hours per Affected Financial 

Institution: The estimated average 

burden associated with the collection of 

information in this notice is one-hour 

recordkeeping per response per affected 

financial institution.35 

Estimated Total Annual Burden: 

8,029 hours.36 

In the Notice, FinCEN invited 

comment on whether the collection of 

information in the final rule is necessary 

for the proper performance of FinCEN’s 

mission.37 Commenters did not address 

the issue specifically. However, all 

commenters stated that subjecting 

mutual funds to 31 CFR 103.22, and 

relieving mutual funds of the obligation 

to file reports on Form 8300, will reduce 

the reporting burden on mutual funds. 

All commenters noted that requiring 

mutual funds to comply with 31 CFR 

103.33 could have an impact on small 

mutual funds. As discussed above in the 

section by section analysis, all 

commenters requested a delayed 

compliance date for 31 CFR 103.33 to 

allow mutual funds time to implement 

changes to their transaction reporting 

and recordkeeping systems. FinCEN has 

determined that all mutual funds should 

34 See Investment Company Institute (ICI) 2008 

Investment Company Fact Book, at 110 (2008), 

available at: http://www.icifactbook.org/pdf/ 

2008_factbook.pdf (number of mutual funds in the 

U.S. in 2007). 

35 The single hour is based on an estimate of 45 

minutes to complete the CTR form and 15 minutes 

for recordkeeping and archiving. 

36 While it is not industry practice for mutual 

funds to accept cash, there is no restriction on 

mutual funds that prohibits mutual funds from 

accepting cash. Therefore, for purposes of 

estimating the annual burden the filing of CTRs will 

have on mutual funds, FinCEN estimates that each 

mutual fund will file one CTR per year. 

37 Amendment to Bank Secrecy Act Regulations; 

Defining Mutual Funds as Financial Institutions, 74 

FR 26996, 26999 (June 5, 2009). 

jlentini on DSKJ8SOYB1PROD with RULES

Federal Register / Vol. 75, No. 71 / Wednesday, April 14, 2010 / Rules and Regulations 19245 

be granted additional time to comply 

with 31 CFR 103.33. 

Under the Paperwork Reduction Act, 

an agency may not conduct or sponsor 

a collection of information, and a person 

is not required to respond to a collection 

of information, unless it displays a valid 

OMB control number. 

List of Subjects in 31 CFR Part 103 

Administrative practice and 

procedure, Banks and banking, Brokers, 

Currency, Foreign banking, Foreign 

currencies, Gambling, Investigations, 

Penalties, Reporting and recordkeeping 

requirements, Securities, Terrorism. 

Amendment 

■ 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 

continues to read as follows: 

Authority: 12 U.S.C. 1829b and 1951–1959; 

31 U.S.C. 5311–5314 and 5316–5332; title III, 

secs. 311, 312, 313, 314, 319, 326, 352, Pub. 

L. 107–56, 115 Stat. 307. 

Subpart A—Definitions 

■ 2. Amend § 103.11 by revising 

paragraph (n)(9); and by adding 

paragraphs (n)(10) and (ccc): 

§ 103.11 Meaning of Terms. 

* * * * * 

(n) * * * 

(9) An introducing broker in 

commodities; 

(10) A mutual fund. 

* * * * * 

(ccc) Mutual fund means an 

‘‘investment company’’ (as the term is 

defined in section 3 of the Investment 

Company Act (15 U.S.C. 80a–3)) that is 

an ‘‘open-end company’’ (as that term is 

defined in section 5 of the Investment 

Company Act (15 U.S.C. 80a–5)) 

registered or required to register with 

the Securities and Exchange 

Commission under section 8 of the 

Investment Company Act (15 U.S.C. 

80a–8). 

* * * * * 

Subpart C—Records Required To Be 

Maintained 

■ 3. Amend § 103.33 by revising 

paragraphs (e)(6)(i)(I) and (f)(6)(i)(I); and 

by adding paragraphs (e)(6)(i)(J) and 

(f)(6)(i)(J), to read as follows: 

§ 103.33 Records to be made and retained 

by financial institutions. 

* * * * * 

(e) * * * 

(6) * * * 

(i) * * * 

(I) A Federal, State or local 

government agency or instrumentality; 

or 

(J) A mutual fund; and 

* * * * * 

(f) * * * 

(6) * * * 

(i) * * * 

(I) A federal, state or local government 

agency or instrumentality; or 

(J) A mutual fund; and 

* * * * * 

Subpart I—Anti-Money Laundering 

Programs 

■ 4. Section 103.130 is amended by 

revising paragraph (a) to read as follows: 

§ 103.130 Anti-money laundering 

programs for mutual funds. 

* * * * * 

(a) For purposes of this section 

mutual fund means an ‘‘investment 

company’’ (as that term is defined in 

section 3 of the Investment Company 

Act (15 U.S.C. (15 U.S.C. 80a–3)) that is 

an ‘‘open-end company’’ (as that term is 

defined in section 5 of the Investment 

Company Act (15 U.S.C. 80a–5)) 

registered or required to register with 

the Commission under section 8 of the 

Investment Company Act (15 U.S.C. 

80a–8). 

* * * * * 

Subpart E—General Provisions 

■ 5. Section 103.56 is amended by 

revising paragraph (b)(8) to read as 

follows: 

§ 103.56 Enforcement. 

* * * * * 

(b) * * * 

(8) To the Commissioner of Internal 

Revenue with respect to all financial 

institutions, except brokers or dealers in 

securities, mutual funds, futures 

commission merchants, introducing 

brokers in commodities, and commodity 

trading advisors, not currently 

examined by Federal bank supervisory 

agencies for soundness and safety; and 

* * * * * 

Dated: April 8, 2010. 

James H. Freis, Jr., 

Director, Financial Crimes Enforcement 

Network. 

[FR Doc. 2010–8500 Filed 4–13–10; 8:45 am] 

BILLING CODE 4810–02–P 

DEPARTMENT OF HOMELAND 

SECURITY 

Coast Guard 

33 CFR Part 117 

[Docket No. USCG–2010–0217] 

Drawbridge Operation Regulation; 

Elizabeth River, Eastern Branch, VA 

AGENCY: Coast Guard, DHS. 


ACTION: Notice of temporary deviation 


from regulations. 


SUMMARY: The Commander, Fifth Coast 

Guard District has issued a temporary 

deviation from the regulations 

governing the operation of the Berkley 

Bridge (I–264), across the Elizabeth 

River, Eastern Branch, mile 0.4, at 

Norfolk, VA. The deviation is necessary 

to facilitate structural repairs to the lift 

spans. This deviation allows the 

drawbridge to remain in the closed to 

navigation position. 

DATES: This deviation is effective from 

8 p.m. on April 23, 2010 through 4:30 

a.m. on June 21, 2010. 

ADDRESSES: Documents mentioned in 

this preamble as being available in the 

docket are part of docket USCG–2010– 

0217 and are available online by going 

to http://www.regulations.gov, inserting 

USCG–2010–0217 in the ‘‘Keyword’’ box 

and then clicking ‘‘Search’’. They are 

also available for inspection or copying 

at the Docket Management Facility (M– 

30), U.S. Department of Transportation, 

West Building Ground Floor, Room 

W12–140, 1200 New Jersey Avenue, SE., 

Washington, DC 20590, between 9 a.m. 

and 5 p.m., Monday through Friday, 


except Federal holidays. 


FOR FURTHER INFORMATION CONTACT: If 


you have questions on this rule, call or 


e-mail Terrance Knowles, 


Environmental Protection Specialist, 


Fifth Coast Guard District; telephone 


757–398–6587, e-mail 


Terrance.A.Knowles@uscg.mil. If you 


have questions on viewing the docket, 


call Renee V. Wright, Program Manager, 


Docket Operations, telephone 202–366– 


9826. 


SUPPLEMENTARY INFORMATION: The 

Virginia Department of Transportation, 

who owns and operates this basculetype drawbridge, has requested a 

temporary deviation from the current 

operating regulations set out in 33 CFR 

117.1007(b) and (c) to facilitate the 

resurfacing of the bridge roadway, as 

modified by the temporary deviation at 

Docket No. USCG–2010–0083, 

published in the Federal Register on 

March 3, 2010, 75 Fed. Reg. 9521.