Federal Register / Vol. 62, No. 211 / Friday, October 31, 1997 / Rules and Regulations 58907

which had been superseded by the new

Standards. See 59 FR 37157.

OGE has not yet issued new

regulations implementing 18 U.S.C. 207,

as amended by the Ethics Reform of

1989, pursuant to its authority under

that Act and the Executive Orders 12674

and 12731. However, OGE indicated in

its notice of the new Standards that it

expects to do so. Further, OGE has since

advised the Agency that to the extent

the NLRB’s current post-employment

regulations set forth in sections 102.119

and 102.120 if the Board’s rules are

more restrictive than 18 U.S.C. 207, as

amended by the Ethics Reform Act of

1989, they are unenforceable as to any

employees leaving the Agency on or

after January 1, 1991, the effective date

of the 1989 amendments to that statute.

Accordingly, the Board is repealing

those regulations, and substituting

therefor a reference to 18 U.S.C. 207.

Regulatory Requirements

This rule merely conforms current

regulations to statutory requirements,

affects only former Agency employees,

relates solely to agency organization,

procedure and practice, and will not

have a significant impact on a

substantial number of small businesses

or impose any information collecting

requirements. Accordingly, the Agency

finds that prior notice and comment is

not required for these rules and that

good cause exists for waiving the

general requirement of delaying the

effective date under the Administrative

Procedure Act (5 U.S.C. 553), and that

the rules are not subject to the

Regulatory Flexibility Act (5 U.S.C.

601), Small Business Regulatory

Enforcement Act (5 U.S.C. 801),

Paperwork Reduction Act (44 U.S.C.

3501), or Executive Order 12866.

List of Subjects in 29 CFR Part 102

Administrative practice and

procedure, Labor management relations.

For reasons set forth above, 29 CFR

part 102 is amended as follows:

PART 102—RULES AND

REGULATIONS

1. The authority citation for 29 CFR

part 102 continues to read as follows:

Authority: Section 6, National Labor

Relations Act, as amended (29 U.S.C. 151,

156). Section 103.117(c) also issued under

Section 552(a)(4)(A) of the Freedom of

Information Act, as amended (5 U.S.C.

552(a)(4)(A)). Sections 102.143 and 102.155

also issued under Section 504(c)(1) of the

Equal Access to Justice Act, as amended (5

U.S.C. 504(c)(1)).

2. Subpart L is revised to read as

follows;

Subpart L—Post-employment

Restrictions on Activities by Former

Officers and Employees

§ 102.119 Post-employee restrictions on

activities by former Officers and employees.

Former officers and employees of the

Agency who were attached to any of its

Regional Offices or the Washington staff

are subject to the applicable postemployment restrictions imposed by 18

U.S.C. 207. Guidance concerning those

restrictions may be obtained from the

Designated Agency Ethics Officer and

any applicable regulations issued by the

Office of Government Ethics.

Dated, Washington, D.C., October 28, 1997.

By direction of the Board.

John J. Toner,

Executive Secretary.

[FR Doc. 97–28926 Filed 10–30–97; 8:45 am]

BILLING CODE 7545–01–M

DEPARTMENT OF THE TREASURY

Departmental Offices

31 CFR Part 1

Privacy Act of 1974; Implementation

AGENCY: Departmental Offices, Treasury.

ACTION: Final Rule.

SUMMARY: In accordance with the

requirements of the Privacy Act of 1974,

as amended, 5 U.S.C. 552a, the

Department of the Treasury gives notice

of an amendment to 31 CFR 1.36 to

exempt a new system of records, the

Suspicious Activity Reporting System

(the SAR System), Treasury/DO.212,

from certain provisions of the Privacy

Act.

EFFECTIVE DATE: October 31, 1997.

FOR FURTHER INFORMATION CONTACT:

Stephen R. Kroll, Legal Counsel,

Financial Crimes Enforcement Network,

2070 Chain Bridge Road, Suite 200,

Vienna, VA 22182, (703) 905–3590.

SUPPLEMENTARY INFORMATION: The

Department of the Treasury published

in the Federal Register, at 62 FR 14376,

March 26, 1997, a proposed rule

exempting the Suspicious Activity

Reporting System (the SAR System),

Treasury/DO.212, from certain

provisions of the Privacy Act pursuant

to 5 U.S.C. 552a(j)(2) and (k)(2). A notice

of this proposed new system of records

was also published in the Federal

Register, at 62 FR 14532, March 26,

1997.

Under 5 U.S.C. 552a(j)(2), the head of

an agency may promulgate rules to

exempt a system of records from certain

provisions of 5 U.S.C. 552a if the system

of records is ‘‘maintained by an agency

or component thereof which performs as

its principal function any activity

pertaining to the enforcement of

criminal laws, including police efforts

to prevent, control, or reduce crime or

to apprehend criminals, and the

activities of prosecutors, courts,

correctional, probation, pardon or

parole authorities, and which consists of

(A) information compiled for the

purpose of identifying individual

criminal offenders and alleged offenders

and consisting only of identifying data

and notations of arrests, the nature and

disposition of criminal charges,

sentencing, confinement, release, and

parole and probation status; (B)

information compiled for the purpose of

a criminal investigation, including

reports of informants and investigators,

and associated with an identifiable

individual; or (C) reports identifiable to

an individual compiled at any stage of

the process of enforcement of the

criminal laws from arrest or indictment

through release from supervision.’’

Under 5 U.S.C. 552a(k)(2), the head of

an agency may promulgate rules to

exempt a system of records from certain

provisions of 5 U.S.C. 552a if the system

of records is ‘‘investigatory material

compiled for law enforcement purposes,

other than material within the scope of

subsection (j)(2) of this section.’’

The notice, proposing that the SAR

System of records be exempted from

sections (c)(3), (c)(4), (d)(1), (d)(2),

(d)(3), (d)(4), (e)(1), (e)(2), (e)(3),

(e)(4)(G), (e)(4)(H), (e)(4)(I), (e)(5), (e)(8),

(f) and (g) of the Privacy Act, requested

that public comments be sent to FinCEN

no later than April 25, 1997. FinCEN

received one comment. The commenter,

a banking trade association, noted that

the proposed exemption ‘‘is

appropriate.’’ Accordingly, the

Department of the Treasury is hereby

giving notice that its proposed rule,

exempting the SAR System from the

above referenced provisions of the

Privacy Act pursuant to 5 U.S.C.

552a(j)(2) and (k)(2) and the authority of

31 CFR 1.23(c), is being adopted as a

final rule without change, except for

minor corrections in paragraphs (k)(3)

and (k)(4), pertaining to cross references

within paragraph (k) of the rule. The

reasons for exempting the system of

records from the above referenced

provisions of the Privacy Act are set

forth in the rule.

The Department of the Treasury has

determined that this proposed rule is

not a ‘‘significant regulatory action’’

under Executive Order 12866.

Pursuant to the requirements of the

Regulatory Flexibility Act, 5 U.S.C. 601–

612, for the reasons set forth in the
58908 Federal Register / Vol. 62, No. 211 / Friday, October 31, 1997 / Rules and Regulations

preamble to the notice of proposed

rulemaking, it is hereby certified that

this final rule will not have a significant

economic impact on a substantial

number of small entities.

In accordance with the provisions of

the Paperwork Reduction Act of 1995,

44 U.S.C. 3507(d), the Department of the

Treasury has determined that this rule

will not impose new recordkeeping,

application, reporting, or other types of

information collection requirements.

List of Subjects in 31 CFR Part 1

Privacy.

Part 1 of Title 31 of the Code of

Federal Regulations is amended as

follows:

PART 1—[AMENDED]

1. The authority citation for Part 1

continues to read as follows:

Authority: 5 U.S.C. 301 and 31 U.S.C. 321.

Subpart A also issued under 5 U.S.C. 552 as

amended. Subpart C also issued under 5

U.S.C. 552a.

2. Section 1.36 of subpart C is

amended by revising the heading

‘‘Office of the Assistant Secretary for

Law Enforcement’’ to read ‘‘Assistant

Secretary (Enforcement)’’ and under

Financial Crimes Enforcement Network

by redesignating paragraph (g) as (l) and

by adding paragraphs (g) through (k) to

read as follows:

§ 1.36 Systems exempt in whole or in part

from the provisions of 5 U.S.C. 552a and

this part.

* * * * *

ASSISTANT SECRETARY (ENFORCEMENT)

Financial Crimes Enforcement Network

* * * * *

(g)In general. The Assistant Secretary

(Enforcement) exempts the system of

records entitled ‘‘Suspicious Activity

Reporting System’’ (Treasury/DO .212)

from certain provisions of the Privacy

Act of 1974, as amended, 5 U.S.C. 552a.

(h) Authority. 5 U.S.C. 552a(j) and (k);

31 CFR 1.23(c).

(i) General exemptions under 5 U.S.C.

552a(j)(2). Pursuant to 5 U.S.C.

552a(j)(2), the Assistant Secretary

(Enforcement) hereby exempts the

Suspicious Activity Reporting System

(SAR System) of records, maintained by

FinCEN, an office reporting to the

Assistant Secretary (Enforcement), from

the following provisions of the Privacy

Act of 1974:

5 U.S.C. 552a(c)(3) and (4);

5 U.S.C. 552a(d)(1), (2), (3), and (4);

5 U.S.C. 552a(e)(1), (2), and (3);

5 U.S.C. 552a(e)(4)(G), (H), and (I):

5 U.S.C. 552a(e)(5) and (8);

5 U.S.C. 552a(f); and

5 U.S.C. 552a(g).

(j) Specific exemptions under 5 U.S.C.

552a(k)(2). To the extent that the

exemption under 5 U.S.C. 552a(j)(2)

does not apply to the SAR System of

records, the Assistant Secretary

(Enforcement) hereby exempts the SAR

System of records from the following

provisions of 5 U.S.C. 552a pursuant to

5 U.S.C. 552a(k)(2):

5 U.S.C. 552a(c)(3);

5 U.S.C. 552a(d)(1), (2), (3), and (4)

5 U.S.C. 552a(e)(1)

5 U.S.C. 552a(e)(4)(G), (H), and (I); and

5 U.S.C. 552a(f).

(k) Reasons for exemptions under 5

U.S.C. 552a(j)(2) and (k)(2). (1) 5 U.S.C.

552a(e)(4)(G) and (f)(1) enable

individuals to inquire whether a system

of records contains records pertaining to

them. Application of these provisions to

the SAR System would allow

individuals to learn whether they have

been identified as suspects or possible

subjects of investigation. Access by

individuals to such knowledge would

seriously hinder the law enforcement

purposes that the SAR System is created

to serve, because individuals involved

in activities that are violations of law

could:

(i) Take steps to avoid detection;

(ii) Inform associates that an

investigation is in progress;

(iii) Learn the nature of the

investigation;

(iv) Learn whether they are only

suspects or identified as violators of

law;

(v) Begin, continue, or resume illegal

conduct upon learning that they are not

identified in the system of records, or

(vi) Destroy evidence needed to prove

the violation.

(2) 5 U.S.C. 552a(d)(1), (e)(4)(H) and

(f)(2), (f)(3) and (f)(5) grant individuals

access to records containing information

about them. The application of these

provisions to the SAR System would

compromise the ability of the

component agencies of the SAR System

to use the information effectively for

purposes of law enforcement.

(i) Permitting access to records

contained in the SAR System would

provide individuals with information

concerning the nature of any current

investigations and would enable them to

avoid detection or apprehension,

because they could;

(A) Discover the facts that would form

the basis of an arrest;

(B) Destroy or alter evidence of

criminal conduct that would form the

basis of their arrest, and

(C) Delay or change the commission of

a crime that was about to be discovered

by investigators.

(ii) Permitting access to either ongoing or closed investigative files would

also reveal investigative techniques and

procedures, the knowledge of which

could enable individuals planning

crimes to structure their operations so as

to avoid detection or apprehension.

(3) 5 U.S.C. 552a(d)(2), (d)(3) and

(d)(4), (e)(4)(H) and (f)(4) permit an

individual to request amendment of a

record pertaining to him or her and

require the agency either to amend the

record or note the disputed portion of

the record and, if the agency refuses to

amend the record, to provide a copy of

the individual’s statement of

disagreement with the agency’s refusal,

to persons or other agencies to whom

the record is thereafter disclosed.

Because these provisions depend on the

individual’s having access to his or her

records, and since these rules exempt

the SAR System from the provisions of

5 U.S.C. 552a relating to access to

records, for the reasons set out in

paragraph (k)(2), these provisions do not

apply to the SAR System.

(4) 5 U.S.C. 552a(c)(4) requires an

agency to inform any person or other

agency about any correction or notation

of dispute that the agency made in

accordance with 5 U.S.C. 552a(d) to any

record that the agency disclosed to the

person or agency, if an accounting of the

disclosure was made. Because this

provision depends on an individual’s

having access to and an opportunity to

request amendment of records

pertaining to him or her, and because

these rules exempt the SAR System

from the provisions of 5 U.S.C. 552a

relating to access to and amendment of

records, for the reasons set forth in

paragraphs (k)(2) and (3), this provision

does not apply to the SAR System.

(5) 5 U.S.C. 552a(c)(3) requires an

agency to make the accounting of any

disclosures of records required by 5

U.S.C. 552a(c)(1) available to the

individual named in the record upon

his or her request. The accounting must

state the date, nature, and purpose of

each disclosure of the record and the

name and address of the recipient.

(i) The application of this provision

would impair the effective use of

information collected in the SAR

System. Making an accounting of

disclosures available to the subjects of

an investigation would alert them to the

fact that another agency is conducting

an investigation into their criminal

activities and could reveal the

geographic location of the other

agency’s investigation, the nature and

purpose of that investigation, and the

dates on which that investigation was

active. Violators possessing such

knowledge would be able to take

measures to avoid detection or

apprehension by altering their

operations, by transferring their

criminal activities to other geographical
Federal Register / Vol. 62, No. 211 / Friday, October 31, 1997 / Rules and Regulations 58909

areas, or by destroying or concealing

evidence that would form the basis for

arrest.

(ii) Moreover, providing an

accounting to the subjects of

investigations would alert them to the

fact that FinCEN has information

regarding possible criminal activities

and could inform them of the general

nature of that information. Access to

such information could reveal the

operation of the information-gathering

and analysis systems of FinCEN, the

Federal Supervisory Agencies and other

SAR System Users and permit violators

to take steps to avoid detection or

apprehension.

(6) 5 U.S. C. 552a(e)(4)(I) requires an

agency to publish a general notice

listing the categories of sources for

information contained in a system of

records. The application of this

provision to the SAR System could

compromise FinCEN’s and the Federal

Supervisory Agencies’ ability to provide

useful information to law enforcement

agencies, because revealing sources for

the information could:

(i) Disclose investigative techniques

and procedures,

(ii) Result in threats or reprisals

against informers by the subjects of

investigations, and

(iii) Cause informers to refuse to give

full information to criminal

investigators for fear of having their

identities as sources disclosed.

(7) 5 U.S.C. 552a(e)(1) requires an

agency to maintain in its records only

such information about an individual as

is relevant and necessary to accomplish

a purpose of the agency required to be

accomplished by statute or executive

order. The application of this provision

to the SAR System could impair the

effectiveness of law enforcement

because in many cases, especially in the

early stages of investigation, it may be

impossible immediately to determine

whether information collected is

relevant and necessary, and information

that initially appears irrelevant and

unnecessary, upon further evaluation or

upon collation with information

developed subsequently, often may

prove helpful to an investigation.

(8) 5 U.S.C. 552a(e)(2) requires an

agency to collect information to the

greatest extent practicable directly from

the subject individual when the

information may result in adverse

determinations about an individual’s

rights, benefits, and privileges under

Federal programs. The application of

this provision to the SAR System would

impair FinCEN’s ability to collect,

analyze and disseminate to System

Users investigative or enforcement

information. The SAR System is

designed to house information about

known or suspected criminal activities

or suspicious transactions that has been

collected and reported by financial

institutions, or their examiners or other

enforcement or supervisory officials. It

is not feasible to rely upon the subject

of an investigation to supply

information. An attempt to obtain

information from the subject of any

investigation would alert that individual

to the existence of an investigation,

providing an opportunity to conceal

criminal activity and avoid

apprehension. Further, with respect to

the initial SAR, 31 U.S.C. § 5318(g)(2)

specifically prohibits financial

institutions making such reports from

notifying any participant in the

transaction that a report has been made.

(9) 5 U.S.C. 552a(e)(3) requires an

agency to inform each individual whom

it asks to supply information, on the

form that it uses to collect the

information or on a separate form that

the individual can retain, the agency’s

authority for soliciting the information;

whether disclosure of information is

voluntary or mandatory; the principal

purposes for which the agency will use

the information; the routine uses that

may be made of the information; and the

effects on the individual of not

providing all or part of the information.

The application of these provisions to

the SAR System would compromise the

ability of the component agencies of the

SAR System to use the information

effectively for purposes of law

enforcement.

(10) 5 U.S.C. 552a(e)(5) requires an

agency to maintain all records it uses in

making any determination about any

individual with such accuracy,

relevance, timeliness, and completeness

as is reasonably necessary to assure

fairness to the individual in the

determination. Application of this

provision to the SAR System would

hinder the collection and dissemination

of information. Because Suspicious

Activity Reports are filed by financial

institutions with respect to known or

suspected violations of law or

suspicious activities, it is not possible at

the time of collection for the agencies

that use the SAR System to determine

that the information in such records is

accurate, relevant, timely and complete.

(11) 5 U.S.C. 552a(e)(8) requires an

agency to make reasonable efforts to

serve notice on an individual when the

agency makes any record on the

individual available to any person

under compulsory legal process, when

such process becomes a matter of public

record. Application of these

requirements to the SAR System would

prematurely reveal the existence of an

ongoing investigation to the subject of

investigation where there is need to

keep the existence of the investigation

secret. It would render ineffective 31

U.S.C. § 5318(g)(2), which prohibits

financial institutions and their officers,

employees and agents from disclosing to

any person involved in a transaction

that a SAR has been filed.

(12) 5 U.S.C. 552a(g) provides an

individual with civil remedies when an

agency wrongfully refuses to amend a

record or to review a request for

amendment, when an agency

wrongfully refuses to grant access to a

record, when any determination relating

to an individual is based on records that

are not accurate, relevant, timely and

complete, and when an agency fails to

comply with any other provision of 5

U.S.C. 552a so as to adversely affect the

individual. Because the SAR System is

exempt from these provisions it follows

that civil remedies for failure to comply

with these provisions are not

appropriate.

* * * * *

Dated: September 26, 1997.

Alex Rodriguez,

Deputy Assistant Secretary (Administration)

[FR Doc. 97–28835 Filed 10–30–97; 8:45 am]

Billing Code: 4820–03–F

DEPARTMENT OF THE TREASURY

31 CFR Part 103

RIN 1506–AA12

Financial Crimes Enforcement

Network; Bank Secrecy Act

Regulations; Exemption From the

Requirement to Report Transactions in

Currency—Phase II; Open Working

Meeting

AGENCY: Financial Crimes Enforcement

Network, Treasury.

ACTION: Meeting on proposed

regulations.

SUMMARY: The Financial Crimes

Enforcement Network (‘‘FinCEN’’) will

hold a working meeting to give

interested persons the opportunity to

discuss with Treasury officials issues

regarding proposed Bank Secrecy Act

regulations relating to exemptions from

the requirement to report transactions in

currency in excess of $10,000.

DATES: November 7, 1997, 9:00 a.m. to

12 noon.

ADDRESSES: Renaissance Washington

D.C. Hotel, Renaissance West Salon, 999

9th Street, NW, Washington, D.C. 20001.

FOR FURTHER INFORMATION CONTACT:

Charles Klingman, Financial Institutions