Federal Register / Vol. 69, No. 239 / Tuesday, December 14, 2004 / Rules and Regulations 74439

1This Interpretive Guidance focuses on the need 

to control risks arising out of the relationship 

between a Money Service Business and its foreign 

counterparty or agent. Under existing FinCEN 

regulations, only Money Service Business 

principals are required to register with FinCEN, and 

only Money Service Business principals establish 

the counterparty or agency relationships. 31 CFR 

103.41. Accordingly, this Interpretive Guidance 

only applies to those Money Service Businesses 

required to register with FinCEN, that is, only those 

Money Service Businesses that may have a 

relationship with a foreign agent or counterparty.

outlined in the ‘‘Recording and Coding 

Guide for the Structure Inventory and 

Appraisal of the Nation’s Bridges.’’

(b) For routine, in-depth, fracture 

critical member, underwater, damage 

and special inspections enter the SI&A 

data into the State or Federal agency 

inventory within 90 days of the date of 

inspection for State or Federal agency 

bridges and within 180 days of the date 

of inspection for all other bridges. 

(c) For existing bridge modifications 

that alter previously recorded data and 

for new bridges, enter the SI&A data 

into the State or Federal agency 

inventory within 90 days after the 

completion of the work for State or 

Federal agency bridges and within 180 

days after the completion of the work 

for all other bridges. 

(d) For changes in load restriction or 

closure status, enter the SI&A data into 

the State or Federal agency inventory 

within 90 days after the change in status 

of the structure for State or Federal 

agency bridges and within 180 days 

after the change in status of the 

structure for all other bridges.

§ 650.317 Reference manuals. 

(a) The materials listed in this subpart 

are incorporated by reference in the 

corresponding sections noted. These 

incorporations by reference were 

approved by the Director of the Federal 

Register in accordance with 5 U.S.C. 

552(a) and 1 CFR part 51. These 

materials are incorporated as they exist 

on the date of the approval, and notice 

of any change in these documents will 

be published in the Federal Register. 

The materials are available for purchase 

at the address listed below, and are 

available for inspection at the National 

Archives and Records Administration 

(NARA). These materials may also be 

reviewed at the Department of 

Transportation Library, 400 Seventh 

Street, SW., Washington, DC, in Room 

2200. For information on the availability 

of these materials at NARA call (202) 

741–6030, or go to the following URL: 

http://www.archives.gov/

federal_register/

code_of_federal_regulations/

ibr_locations.html. In the event there is 

a conflict between the standards in this 

subpart and any of these materials, the 

standards in this subpart will apply. 

(b) The following materials are 

available for purchase from the 

American Association of State Highway 

and Transportation Officials, Suite 249, 

444 N. Capitol Street, NW., Washington, 

DC 20001. The materials may also be 

ordered via the AASHTO bookstore 

located at the following URL: http://

www.aashto.org/aashto/home.nsf/

FrontPage.

(1) The Manual for Condition 

Evaluation of Bridges, 1994, second 

edition, as amended by the 1995, 1996, 

1998, and 2000 interim revisions, 

AASHTO, incorporation by reference 

approved for §§ 650.305 and 650.313. 

(2) 2001 Interim Revision to the 

Manual for Condition Evaluation of 

Bridges, AASHTO, incorporation by 

reference approved for §§ 650.305 and 

650.313. 

(3) 2003 Interim Revision to the 

Manual for Condition Evaluation of 

Bridges, AASHTO, incorporation by 

reference approved for §§ 650.305 and 

650.313.

[FR Doc. 04–27355 Filed 12–13–04; 8:45 am] 

BILLING CODE 4910–22–P

DEPARTMENT OF THE TREASURY

31 CFR Part 103 

Financial Crimes Enforcement 

Network; Interpretive Release 2004–1—

Anti-Money Laundering Program 

Requirements for Money Services 

Businesses With Respect to Foreign 

Agents or Foreign Counterparties

AGENCY: Financial Crimes Enforcement 

Network (FinCEN), Treasury.

ACTION: Final rule; interpretive release.

SUMMARY: This Interpretive Release sets 

forth an interpretation of the regulation 

requiring Money Services Businesses 

that are required to register with 

FinCEN to establish and maintain antimoney laundering programs. 

Specifically, this Interpretive Release 

clarifies that the anti-money laundering 

program regulation requires such Money 

Services Businesses to establish 

adequate and appropriate policies, 

procedures and controls commensurate 

with the risk of money laundering and 

the financing of terrorism posed by their 

relationship with foreign agents or 

foreign counterparties of the Money 

Services Business.

DATES: Effective June 13, 2005.

FOR FURTHER INFORMATION CONTACT:

Office of Regulatory Policy and 

Programs Division, 1–800–800–2877, 

Office of Chief Counsel (703) 905–3590 

(not a toll free number).

SUPPLEMENTARY INFORMATION: Section 

5318(h) of the Bank Secrecy Act, which 

is codified in subchapter II of chapter 53 

of title 31, United States Code, requires 

every financial institution to establish 

an anti-money laundering program. The 

Bank Secrecy Act regulations define 

financial institution to include money 

service businesses. On April 29, 2002, 

FinCEN issued interim final rules-31 

CFR 103.125-concerning the application 

of the anti-money laundering program 

requirement to money services 

businesses. 67 FR 21114.

List of Subjects in 31 CFR Part 103 

Authority delegations (government 

agencies), bank, banking, currency, 

investigations, reporting and 

recordkeeping requirements.

Department of the Treasury 

31 CFR Chapter I 

Authority and Issuance

■ For the reasons set forth in the 

preamble, part 103 of title 31 of the Code 

of Federal Regulations 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. 312, 313, 314, 319, 326, 352, Pub. L. 

107–56, 115 Stat. 307, 12 U.S.C. 1786(q).

■ 2. Part 103 is amended by adding a 

new appendix C to read as follows:

APPENDIX C TO PART 103—

INTERPRETIVE RULES

Release No. 2004–01 

This Interpretive Guidance sets forth our 

interpretation of the regulation requiring 

Money Services Businesses that are required 

to register with FinCEN to establish and 

maintain anti-money laundering programs. 

See 31 CFR 103.125. Specifically, this 

Interpretive Guidance clarifies that the antimoney laundering program regulation 

requires Money Services Businesses to 

establish adequate and appropriate policies, 

procedures, and controls commensurate with 

the risks of money laundering and the 

financing of terrorism posed by their 

relationship with foreign agents or foreign 

counterparties of the Money Services 

Business.1

Under existing Bank Secrecy Act 

regulations, we have defined Money Services 

Businesses to include five distinct types of 

financial services providers and the U.S. 

Postal Service: (1) Currency dealers or 

exchangers; (2) check cashers; (3) issuers of 

traveler’s checks, money orders, or stored 

74440 Federal Register / Vol. 69, No. 239 / Tuesday, December 14, 2004 / Rules and Regulations 

2See 31 CFR 103.125 (requirement for Money 

Service Businesses to establish and maintain an 

anti-money laundering compliance program); 31 

CFR 103.22 (requirement for Money Service 

Businesses to file currency transaction reports); 31 

CFR 103.20 (requirement for Money Service 

Businesses, other than check cashers and issuers, 

sellers, or redeemers of stored value, to file 

suspicious activity reports); 31 CFR 103.29 

(requirement for Money Service Businesses that sell 

money orders, traveler’s checks, or other 

instruments for cash to verify the identity of the 

customer and create and maintain a record of each 

cash purchase between $3,000 and $10,000, 

inclusive); 31 CFR 103.33(f) (requirement for Money 

Service Businesses that send or accept instructions 

to transmit funds of $3,000 or more to verify the 

identity of the sender or receiver and create and 

maintain a record of the transmittal regardless of 

the method of payment); and 31 CFR 103.37 

(requirement for currency exchangers to create and 

maintain a record of each exchange of currency in 

excess of $1,000).

3For an analysis of informal value transfer 

systems, see FinCEN’s Report to Congress Pursuant 

to Section 359 of the Patriot Act, available on 

www.fincen.gov.

4FinCEN previously interpreted 31 CFR 103.125 

to impose a similar obligation on a money 

transmitter with respect to its domestic agents. See 

Matter of Western Union, No. 2003–2 (Mar. 6, 2003) 

(www.fincen.gov).

value; (4) sellers or redeemers of traveler’s 

checks, money orders, or stored value; and 

(5) money transmitters. See 31 CFR 

103.11(uu). With limited exception, Money 

Services Businesses are subject to the full 

range of Bank Secrecy Act regulatory 

controls, including the anti-money 

laundering program rule, suspicious activity 

and currency transaction reporting rules, and 

various other identification and 

recordkeeping rules.2

Many Money Services Businesses, 

including the vast majority of money 

transmitters in the United States, operate 

through a system of agents both domestically 

and internationally. We estimate that a 

substantial majority of all cross-border 

remittances by money transmitters are 

conducted using this model. Other Money 

Services Businesses may operate through 

more informal relationships, such as the 

trust-based hawala system.3 Regardless of the 

form of the relationship between a Money 

Services Business and its foreign agents or 

counterparties, Money Services Business 

transactions generally are initiated by 

customers seeking to send or receive funds, 

cash checks, buy or sell money orders or 

traveler’s checks, or buy or sell currency. The 

customer directs the Money Services 

Business to execute the transactions; the 

Money Services Business does not 

unilaterally determine the recipient of its 

products or services. Although the customer 

can use the Money Services Business’

services, the customer does not typically 

establish an account relationship with the 

Money Services Business. The focus of this 

Interpretive Guidance is the establishment of, 

and ongoing relationship between, a Money 

Services Business and its foreign agent or 

foreign counterparty that facilitates the flow 

of funds cross-border into and out of the 

United States on behalf of customers.

The Cross-Border Flow of Funds through 

Money Services Businesses and Associated 

Risks

Ensuring that financial institutions based 

in the United States establish and apply 

adequate and appropriate policies, 

procedures, and controls in their anti-money 

laundering compliance programs to protect 

the international gateways to the U.S. 

financial system is an essential element of 

the Bank Secrecy Act regulatory regime. This 

Interpretive Guidance forms a part of our 

comprehensive approach to accomplishing 

this goal. To the extent Money Services 

Businesses utilize relationships with foreign 

agents or counterparties to facilitate the 

movement of funds into or out of the United 

States, they must take reasonable steps to 

guard against the flow of illicit funds, or the 

flow of funds from legitimate sources to 

persons seeking to use those funds for illicit 

purposes, through such relationships. 

The money laundering or terrorism 

financing risks associated with foreign agents 

or counterparties are similar to the risks 

presented by domestic agents of Money 

Services Businesses. For example, the foreign 

agent of the domestic Money Services 

Business may have lax anti-money 

laundering policies, procedures, and internal 

controls, or actually may be complicit with 

those seeking to move illicit funds. In some 

instances, the risk with foreign agents can be 

greater than with domestic agents because 

foreign agents are not subject to the Bank 

Secrecy Act regulatory regime; the extent to 

which they are subject to anti-money 

laundering regulation, and the quality of that 

regulation, will vary with the jurisdictions in 

which they are located. 

There are a variety of ways in which a 

Money Services Business may be susceptible 

to the unwitting facilitation of money 

laundering through foreign agents or 

counterparties. For example, our review of 

Bank Secrecy Act data revealed several 

instances of suspected criminal activity—

detected by existing anti-money laundering 

and suspicious activity reporting programs of 

Money Services Businesses and banks—

where foreign agents of Money Services 

Business have engaged in bulk sales of 

sequentially numbered, U.S. denominated 

traveler’s checks or blocks of money orders, 

to one or two individuals. The individuals 

involved frequently purchased the 

instruments on multiple dates and in 

different locations, structuring the purchases 

to avoid reporting thresholds and issuer 

limits on daily instrument sales. The 

instruments usually had illegible signatures 

or failed to designate a beneficiary or payor. 

The instruments were then negotiated with 

one or more dealers in goods, such as 

diamonds, gems, or precious metals, 

deposited in foreign banks, and cleared 

through U.S. banks. In such cases, the 

clearing banks were so far removed from the 

transactions that they could not trace back or 

screen either the intervening transactions or 

the individuals involved in the transactions. 

A case involving suspicious activity in a 

Money Services Business’ domestic agent 

provides a further example of the type of 

high-risk activity that also may be engaged in 

by foreign agents or counterparties. In this 

instance, the domestic Money Service 

Business had policies, procedures, and 

controls that facilitated the detection of illicit 

activity at the agent. A group of six customers 

entered a money transmitter agent at 

approximately five-minute intervals to send 

the same structured amounts ($2,500) to the 

same receiver in a foreign country. Several 

weeks later, another group of six customers 

entered the same agent location and 

conducted an identical pattern of successive 

$2,500 transfers (a few minutes apart) to the 

same recipient in the same foreign country as 

the first set of transactions. Some of the 

individuals in the second group had the same 

last names as customers in the first group. 

Additional suspicious activity reports filed 

by the primary Money Services Business 

identified several other groups of customers 

initiating money transfers at this same agent 

business location, in the same manner, and 

in the same overall time frame. This activity 

by an agent drew the scrutiny of the Money 

Services Business, and in addition to the 

filing of suspicious activity reports, led to the 

termination of the relationship of the Money 

Services Business with the agent. 

These examples of illicit activity occurring 

at the agents of Money Services Businesses 

underscore the need for Money Services 

Businesses to include, as a part of their antimoney laundering programs, procedures, 

policies, and controls to govern relationships 

with foreign agents and counterparties to 

enable the Money Services Business to 

perform the appropriate level of suspicious 

activity and risk monitoring. We believe that 

this obligation is an essential part of each 

Money Services Business’ existing obligation 

under 31 CFR 103.125 to develop and 

implement an effective anti-money 

laundering program.4 This Interpretive 

Guidance will aid Money Services 

Businesses in adopting appropriate riskbased policies, procedures, and controls on 

cross-border relationships with foreign agents 

and counterparties.

Anti-Money Laundering Program Elements 

Relating to Foreign Agents and 

Counterparties 

Under 31 CFR 103.125(a), Money Services 

Businesses are required to develop, 

implement, and maintain an effective antimoney laundering program reasonably 

designed to prevent the Money Services 

Business from being used to facilitate money 

laundering and the financing of terrorist 

activities. The program must be 

commensurate with the risks posed by the 

location, size, nature, and volume of the 

financial services provided by the Money 

Services Business. Additionally, the program 

must incorporate policies, procedures, and 

controls reasonably designed to assure 

compliance with the Bank Secrecy Act and 

implementing regulations. 

With respect to Money Services Businesses 

that utilize foreign agents or counterparties, 

a Money Services Business’ anti-money 

laundering program must include risk-based 

policies, procedures, and controls designed 

to identify and minimize money laundering 

and terrorist financing risks associated with 

foreign agents and counterparties that 

facilitate the flow of funds into and out of the 

United States. The program must be aimed at 

Federal Register / Vol. 69, No. 239 / Tuesday, December 14, 2004 / Rules and Regulations 74441

5Our anti-money laundering program rule, 31 

CFR 103.125(d)(iii), permits Money Service 

Businesses to satisfy this last requirement with 

regard to their domestic agents (which are also 

Money Service Businesses under the BSA 

regulations), by allocating responsibility for the 

program to their agents. Such an allocation, 

however, does not relieve a Money Service Business 

from ultimate responsibility for establishing and 

maintaining an effective anti-money laundering 

program. Id.

6Nothing in this Interpretive Guidance is 

intended to require Money Service Businesses to 

monitor or review, for purposes of the Bank Secrecy 

Act, transactions or activities of foreign agents or 

counterparties that occur entirely outside of the 

United States and do not flow from, to, or through 

the United States.

preventing the products and services of the 

Money Services Business from being used to 

facilitate money laundering or terrorist 

financing through these relationships and 

detecting the use of these products and 

services for money laundering or terrorist 

financing by the Money Services Business or 

agent. Relevant risk factors may include, but 

are not limited to: 

• The foreign agent or counterparty’s 

location and jurisdiction of organization, 

chartering, or licensing. This would include 

considering the extent to which the relevant 

jurisdiction is internationally recognized as 

presenting a greater risk for money 

laundering or is considered to have more 

robust anti-money laundering standards. 

• The ownership of the foreign agent or 

counterparty. This includes whether the 

owners are known, upon reasonable inquiry, 

to be associated with criminal conduct or 

terrorism. For example, have the individuals 

been designated by Treasury’s Office of 

Foreign Assets Control as Specially 

Designated Nationals or Blocked Persons 

(i.e., involvement in terrorism, drug 

trafficking, or the proliferation of weapons of 

mass destruction)?

• The extent to which the foreign agent or 

counterparty is subject to anti-money 

laundering requirements in its jurisdiction 

and whether it has established such controls. 

• Any information known or readily 

available to the Money Services Business 

about the foreign agent or counterparty’s antimoney laundering record, including public 

information in industry guides, periodicals, 

and major publications. 

• The nature of the foreign agent or 

counterparty’s business, the markets it 

serves, and the extent to which its business 

and the markets it serves present an 

increased risk for money laundering or 

terrorist financing. 

• The types and purpose of services to be 

provided to, and anticipated activity with, 

the foreign agent or counterparty. 

• The nature and duration of the Money 

Services Business’ relationship with the 

foreign agent or counterparty. 

Specifically, a Money Services Business’

anti-money laundering program should 

include procedures for the following: 

1. Conduct of Due Diligence on Foreign 

Agents and Counterparties 

Money Services Businesses should 

establish procedures for conducting 

reasonable, risk-based due diligence on 

potential and existing foreign agents and 

counterparties to help ensure that such 

foreign agents and counterparties are not 

themselves complicit in illegal activity 

involving the Money Services Business’

products and services, and that they have in 

place appropriate anti-money laundering 

controls to guard against the abuse of the 

Money Services Business’ products and 

services. Such due diligence must, at a 

minimum, include reasonable procedures to 

identify the owners of the Money Services 

Business’ foreign agents and counterparties, 

as well as to evaluate, on an ongoing basis, 

the operations of those foreign agents and 

counterparties and their implementation of 

policies, procedures, and controls reasonably 

designed to help assure that the Money 

Services Business’ products and services are 

not subject to abuse by the foreign agent’s or 

counterparty’s customers, employees, or 

contractors.5 The extent of the due diligence 

required will depend on a variety of factors 

specific to each agent or counterparty. We 

expect Money Services Businesses to assess 

such risks and perform due diligence in a 

manner consistent with that risk, in light of 

the availability of information.

2. Risk-based Monitoring of Foreign Agents or 

Counterparties 

In addition to the due diligence described 

above, in order to detect and report suspected 

money laundering or terrorist financing, 

Money Services Businesses should establish 

procedures for risk-based monitoring and 

review of transactions from, to, or through 

the United States that are conducted through 

foreign agents and counterparties.6 Such 

procedures should also focus on identifying 

material changes in the agent’s risk profile, 

such as a change in ownership, business, or 

the regulatory scrutiny to which it is subject.

The review of transactions should enable 

the Money Services Business to identify and, 

where appropriate, report as suspicious such 

occurrences as: instances of unusual wire 

activity, bulk sales or purchases of 

sequentially numbered instruments, multiple 

purchases or sales that appear to be 

structured, and illegible or missing customer 

information. Additionally, Money Services 

Businesses should establish procedures to 

assure that their foreign agents or 

counterparties are effectively implementing 

an anti-money laundering program and to 

discern obvious breakdowns in the 

implementation of the program by the foreign 

agent or counterparty. 

Similarly, money transmitters should have 

procedures in place to enable them to review 

foreign agent or counterparty activity for 

signs of structuring or unnecessarily complex 

transmissions through multiple jurisdictions 

that may be indicative of layering. Such 

procedures should also enable them to 

discern attempts to evade identification or 

other requirements, whether imposed by 

applicable law or by the Money Services 

Business’ own internal policies. Activity by 

agents or counterparties that appears aimed 

at evading the Money Services Business’ own 

controls can be indicative of complicity in 

illicit conduct; this activity must be 

scrutinized, reported as appropriate, and 

corrective action taken as warranted. 

3. Corrective Action and Termination 

Money Services Businesses should have 

procedures for responding to foreign agents 

or counterparties that present unreasonable 

risks of money laundering or the financing of 

terrorism. Such procedures should provide 

for the implementation of corrective action 

on the part of the foreign agent or 

counterparty or for the termination of the 

relationship with any foreign agent or 

counterparty that the Money Services 

Business determines poses an unacceptable 

risk of money laundering or terrorist 

financing, or that has demonstrated systemic, 

willful, or repeated lapses in compliance 

with the Money Services Business’ own antimoney laundering procedures or 

requirements. 

While Money Services Businesses may 

already have implemented some or all of the 

procedures described in this Interpretive 

Guidance as a part of their anti-money 

laundering programs, we wish to provide a 

reasonable period of time for all affected 

Money Services Businesses to assess their 

operations, review their existing policies and 

programs for compliance with this Advisory, 

and implement any additional necessary 

changes. We will expect full compliance with 

this Interpretive Release within 180 days. 

Finally, we are mindful of the potential 

impact that this Interpretive Release may 

have on continuing efforts to bring informal 

value transfer systems into compliance with 

the existing regulatory framework of the Bank 

Secrecy Act. Experience has demonstrated 

the challenges in securing compliance by, for 

instance, hawalas and other informal value 

transfer systems. Further specification of 

Bank Secrecy Act compliance obligations 

carries with it the risk of driving these 

businesses underground, thereby 

undermining our ultimate regulatory goals. 

On balance, however, we believe that 

outlining the requirements for dealing with 

foreign agents and counterparties, including 

informal networks, is appropriate in light of 

the risks of money laundering and the 

financing of terrorism.

William J. Fox, 

Director.

[FR Doc. 04–27287 Filed 12–13–04; 8:45 am] 

BILLING CODE 4810–02–P

DEPARTMENT OF HOMELAND 

SECURITY 

Coast Guard 

33 CFR Part 117 

[CGD01–04–146] 

Drawbridge Operation Regulations: 

Merrimack River, MA

AGENCY: Coast Guard, DHS.

ACTION: Notice of temporary deviation 

from regulations. 

SUMMARY: The Commander, First Coast 

Guard District, has issued a temporary 

deviation from the drawbridge operation