3640 Federal Register / Vol. 63, No. 16 / Monday, January 26, 1998 /Rules and Regulations

1 Information relating to the Paperwork Reduction

Act appears at the end of this Issuance.

veterinary medical officers (VMOs) and

animal health technicians (AHTs) to

conduct temperature checks of the

animals to be imported. APHIS charges

hourly user fees for inspection services

conducted outside the United States.

The published hourly fee for VMOs and

AHTs is $56.00. The agency estimates

that it takes 3 hours for APHIS

personnel to travel to Mexican

quarantine facilities and complete the

temperature checks. The elimination of

these checks will save the importer

about $1,176 per shipment. Since

slaughter horse imports from Mexico

average about 40 head per shipment,

this is a savings of about $29.40 per

head. Other types of imported horses

from Mexico average about two head per

shipment, for a savings of $588 per

head. At fiscal year 1996 import levels,

the elimination of the user fees for horse

inspection for VEE in Mexico will

decrease the cost of importation by

about $2.5 million annually.

The Regulatory Flexibility Act

requires that the Agency specifically

consider the economic impact

associated with rule changes on small

entities. The Small Business

Administration (SBA) has set forth size

criteria by Standard Industrial

Classification (SIC) which can be used

as a guide in determining which

economic entities meet the definition of

a small business. The SBA’s definition

of a small business engaged in the

wholesale trading of livestock is one

that employs no more than 100 persons.

Currently, there are 1,992 domestic

entities that trade livestock wholesale.

About 1,965 of these entities are

classified as small by the SBA. The

exact number of domestic wholesale

livestock traders currently importing

Mexican horses cannot be determined.

However, entities, whether large or

small, engaged in importing Mexican

horses will be positively impacted by

this rule change.

Under these circumstances, the

Administrator of the Animal and Plant

Health Inspection Service has

determined that this action will not

have a significant economic impact on

a substantial number of small entities.

Executive Order 12988

This rule has been reviewed under

Executive Order 12988, Civil Justice

Reform. This rule: (1) Preempts all State

and local laws and regulations that are

inconsistent with this rule; (2) has no

retroactive effect; and (3) does not

require administrative proceedings

before parties may file suit in court

challenging this rule.

Paperwork Reduction Act

This rule contains no new

information collection or recordkeeping

requirements under the Paperwork

Reduction Act of 1995 (44 U.S.C. 3501

et seq.).

List of Subjects in 9 CFR Part 93

Animal disease, Imports, Livestock,

Poultry and poultry products,

Quarantine, Reporting and

recordkeeping requirements.

Accordingly, 9 CFR part 93 is

amended as follows:

PART 93—IMPORTATION OF CERTAIN

ANIMALS, BIRDS, AND POULTRY,

AND CERTAIN ANIMAL, BIRD, AND

POULTRY PRODUCTS;

REQUIREMENTS FOR MEANS OF

CONVEYANCE AND SHIPPING

CONTAINERS

1. The authority citation for part 93

continues to read as follows:

Authority: 7 U.S.C. 1622; 19 U.S.C. 1306;

21 U.S.C. 102–105, 111, 114a, 134a, 134b,

134c, 134d, 134f, 135, 136, and 136a; 31

U.S.C. 9701; 7 CFR 2.22, 2.80, and 371.2(d).

§ 93.308 [Amended]

2. In § 93.308, paragraph (a)(1) is

amended by removing the reference to

‘‘§ 93.317’’ and adding in its place the

reference to ‘‘§§ 93.317 and 93.324’’.

§ 93.324 [Amended]

3. Section 93.324 is amended by

removing the words ‘‘, for not less than

7 days and’’ and by removing the words

‘‘approved by the Administrator and

constructed so as to prevent the entry of

mosquitoes and other hematophagous

insects’’.

§ 93.326 [Amended]

4. In § 93.326, the first sentence is

amended by removing the words

‘‘93.323, and 93.324’’ and adding in

their place the words ‘‘and 93.323’’.

Done in Washington, DC, this 20th day of

January 1998.

Terry L. Medley,

Administrator, Animal and Plant Health

Inspection Service.

[FR Doc. 98–1775 Filed 1–23–98; 8:45 am]

BILLING CODE 3410–34–P

DEPARTMENT OF THE TREASURY

31 CFR Part 103

Conditional Exceptions to Bank

Secrecy Act Regulations Relating to

Orders for Transmittals of Funds by

Financial Institutions

AGENCY: Financial Crimes Enforcement

Network, Treasury.

ACTION: Grant of conditional exceptions.

SUMMARY: This document contains two

conditional exceptions to a provision of

the Bank Secrecy Act regulations. The

exceptions permit financial institutions

to comply more efficiently with

requirements for inclusion of certain

information in transmittal orders for

transmissions of funds.

EFFECTIVE DATE: January 26, 1998.

FOR FURTHER INFORMATION CONTACT:

Peter Djinis, Associate Director,

FinCEN, (703) 905–3920; Charles

Klingman, Financial Institutions Policy

Specialist, Office of Program

Development, FinCEN, (703) 905–3920;

Stephen R. Kroll, Legal Counsel,

FinCEN, and Cynthia L. Clark, Acting

Deputy Legal Counsel, Office of Legal

Counsel, FinCEN, (703) 905–3590.

SUPPLEMENTARY INFORMATION:

I. Introduction

The statute generally referred to as the

‘‘Bank Secrecy Act,’’ Titles I and II of

Public Law 91–508, as amended,

codified at 12 U.S.C. 1829b, 12 U.S.C.

1951–1959, and 31 U.S.C. 5311–5330,

authorizes the Secretary of the Treasury,

inter alia, require financial institutions

to keep records and file reports that are

determined to have a high degree of

usefulness in criminal, tax, and

regulatory matters, and to implement

counter-money laundering programs

and compliance procedures. Regulations

implementing Title II of the Bank

Secrecy Act (codified at 31 U.S.C. 5311–

5330) appear at 31 CFR part 103. The

authority of the Secretary to administer

the Bank Secrecy Act has been

delegated to the Director of FinCEN.1

II. FinCEN Issuance 98–1

This document, FinCEN Issuance 98–

1, grants two conditional exceptions to

the operation of the rules contained at

31 CFR 103.33(g). The background,

purpose, and terms of the two

exceptions are explained below.

Background

On January 3, 1995, the Financial

Crimes Enforcement Network

(‘‘FinCEN’’) of the Department of the

Treasury issued a rule, 31 CFR 103.33(g)

(the ‘‘Travel Rule’’), requiring financial

institutions to include certain

information in transmittal orders

relating to transmittals of funds of

$3,000 or more. The Travel Rule

complements the rules jointly issued by

the Board of Governors of the Federal

Reserve System and FinCEN (the ‘‘Joint

Rule’’) requiring the maintenance of
Federal Register / Vol. 63, No. 16 / Monday, January 26, 1998 /Rules and Regulations 3641

2The provisions of 12 U.S.C. 1829b(b), amended

the Bank Secrecy Act (i) to require the Secretary of

the Treasury and the Federal Reserve Board jointly

to promulgate recordkeeping requirements for

international funds transfers by depository

institutions and nonbank depository institutions,

and (ii) to authorize the Secretary and the Board

jointly to promulgate regulations for domestic funds

transfers by depository institutions. The Secretary

is authorized by 31 U.S.C. 5318(g) to require

financial institutions to carry out anti-money

laundering programs. Both 31 U.S.C. 5318(h) and 12

U.S.C. 1829b(b) were added to the Bank Secrecy Act

by the Annunzio-Wylie Anti-Money Laundering

Act of 1992 (Title XV of Pub. L. 102–550).

3The expanded Fedwire format was announced

by the Federal Reserve Board on the same day as

the Joint Rule and the Travel Rule. See 60 FR 220

and 60 FR 234 (January 3, 1995).

4The members of the Working Group are Bank of

America, N.A.; The Bank of New York; Bankers

Trust Company; The Chase Manhattan Bank;

Citibank, N.A.; J.P. Morgan, Inc.; Marine Midland

Bank; Merrill Lynch, Pierce, Fenner & Smith; MTB

Bank; NationsBank, N.A.; Prudential Securities,

Inc.; and Republic National Bank of New York.

5The January 1997 Guidance document was

distributed to banks, thrift institutions, and credit

unions by their respective federal regulators and

was the subject of NASD–R Notice to Members 97–

13, sent to members of the National Association of

Securities Dealers.

records by insured depository

institutions and other financial

institutions with respect to domestic

and international transmittal of funds

transactions.2 The Joint Rule defines the

terms used in both that Rule and the

Travel Rule.

Both the Joint Rule and the Travel

Rule were amended on April 1, 1996, in

response to a request for regulatory

relief by affected financial institutions.

The changes to the Travel Rule made at

that time included addition of a ‘‘safe

harbor’’ for Travel Rule compliance

prior to the date of an institution’s

conversion to the expanded message

format of the Fedwire funds transfer

system of the Federal Reserve Banks.3

The ‘‘safe harbor’’ permits an

institution—prior to the completion of

its Fedwire conversion—to omit from a

transmittal order some of the

information otherwise required by the

Travel Rule, so long as the missing

information is retrieved and supplied in

a reasonable amount of time in response

to a law enforcement request or a

judicial order, or to a request by another

financial institution that would

otherwise have received the information

to assist the latter institution in its own

Bank Secrecy Act compliance efforts.

Use of Customer Information File

Information

A group of banks and brokers and

dealers in securities (the ‘‘Working

Group’’) 4, has sought relief from the

strict operation of the Travel Rule’s

requirement that each transmittor’s

financial institution and intermediary

financial institution include in a

transmittal order the transmittor’s name

and street address. See 31 CFR

103.33(g)(1) (i)–(ii) and (g)(2) (i)–(ii).

Absent an exception or special rule of

some kind, satisfaction of the terms of

the Travel Rule require the use of true

name and street address information.

The Bank Secrecy Act rules for the

maintenance of customer and

transaction records (one of which is the

Joint Rule), and for the reporting of

various transactions or circumstances,

require the use of true name and street

address information, and prior guidance

issued by FinCEN stated plainly that

‘‘[t]he use of a code name, or

pseudonym is prohibited’’ under the

Travel Rule. Question and Answer 19,

Guidance for Financial Institutions on

the Transmittal of Funds ‘‘Travel

Regulations’’ (January 1997).5

The Working Group has represented

that the present ability of many covered

institutions to satisfy the Travel Rule at

all depends upon the ability of those

institutions to make use electronically

of information contained in the

institutions’ automated customer

information files, or ‘‘CIFs.’’ CIFs, the

Working Group has told FinCEN, will

always contain each customer’s actual

account number. However, CIFs will

often contain a post office box mailing

address rather than the customer’s street

address, or (somewhat less frequently) a

nominee or ‘‘special’’ or coded name

rather than the customer’s true name; in

other cases CIFs may contain both true

and nominee, ‘‘special’’ or coded name

or Post Office Box address information,

but will be programmed to use the latter

for communications purposes outside

the institution itself. The result is that,

although the originating institution will

know a customer’s street address and

true name, reliance on CIFs as presently

programmed could produce ‘‘traveling

information’’ other than actual names

and street addresses. The banks and

broker-dealers involved have further

represented that reprogramming CIFs so

that those files can produce true name

and address information when

necessary to satisfy the Travel Rule (if

for some reason the files contain post

office box addresses or nominee,

‘‘special,’’ or coded names) will require

significant resources and would likely

involve diverting programming time

away from more urgent programming

needs, especially correction of the

world-wide ‘‘Year 2000’’ problem.

Full Travel Rule Compliance Following

Conversion to Expanded Fedwire

Message Format

The ‘‘safe harbor’’ contained in 31

CFR 103.33(g) only applies prior to the

date that an institution completes its

conversion to the expanded message

format of the Fedwire funds transfer

system. Generally, that transformation is

required to be completed by the end of

1997.

A number of financial institutions

have represented to FinCEN that they

have found it impossible to begin full

compliance with the Travel Rule

immediately upon conversion to the

expanded Fedwire message format. The

inability to meet the date for full

compliance set out in the safe harbor

arises because of delays in completing

related programming tasks, for example

the linking of inbound and outbound

message systems.

Need for Flexibility in Administration of

Travel Rule

Although the Travel Rule

complements the Joint Rule, FinCEN

has made clear in the past that the

purposes of the Travel Rule are not

incompatible with flexibility in

applying the Rule’s literal terms. The

need for administrative flexibility is

increased because Treasury intends,

within the next 18 months, to review

and consider making appropriate

modifications to the Travel Rule. See 61

FR 14383, 14387–14388. Modifications

are appropriate to meet particular

operating problems, so long as complete

information is available, at some point,

in the domestic funds transfer chain and

investigators are given adequate notice

that the funds transmittal order itself

must be supplemented by other

information to provide a complete

picture of the transmittal involved. See

31 CFR 103.33(g)(3).

Grant of Exceptions

By virtue of the authority contained in

31 CFR 103.45(a) and (b), which has

been delegated to the Director of

FinCEN, the following exceptions to the

operation of the rules in 31 CFR

103.33(g) are approved:

1. A transmittor’s financial institution

that is otherwise subject to the terms of

31 CFR 103.33(g) with respect to

transmittal of funds may satisfy (i) the

requirement of 31 CFR 103.33(g)(1)(i)

that the name of the transmittor be

included in a transmittal order, and (ii)

the requirement of 31 CFR

103.33(g)(1)(ii) that the transmittor’s

address be included in a transmittal

order, with respect to a particular

transmittal order, by including in the

transmittal order the name and address

information with respect to the

transmittor contained in the financial

institution’s general automated CIFs, so

long as:
3642 Federal Register / Vol. 63, No. 16 / Monday, January 26, 1998 /Rules and Regulations

(a) The CIFs are not specifically

altered for the particular transmittal of

funds in question,

(b) The CIFs are generally

programmed and used by the institution

for customer communications, not

simply for transmittal of funds

transactions, and as so programmed

generate other than true name and street

address information;

(c) The institution itself knows and

can associate the CIF information used

in the funds transmittal order with the

true name and street address of the

transmittor of the order;

(d) The transmittal order includes a

question mark symbol (‘‘?’’)

immediately following any designation

of the transmittor other than by a true

name on the order; and

(e) Any report required to be made

under 31 CFR 103.21 or 31 CFR 103.22

by the institution with respect to the

funds transmittal to which the

transmittal order relates contains true

name and street address information for

the transmittor and plainly associates

the report with the particular funds

transmittal in question.

This exception has no application to

any funds transmittals for whose

processing an institution does not

automatically rely on preprogrammed

and prespecified CIF name and address

information. Moreover, institutions are

reminded that the use of nominee,

‘‘special,’’ or coded names is barred by

the Travel Rule, in the absence of the

foregoing exception with respect to CIFs

only. Any new customer request for use

of a nominee, or ‘‘special’’ or coded

name in a CIF after the date of this

Issuance should be carefully evaluated

by depository institutions as a

potentially suspicious transaction

requiring reporting under 31 CFR

103.21, and reported unless an

examination reveals that the request is

made for an independent lawful

business purpose and is the sort in

which the customer involved would be

expected to engage.

2. A financial institution will have

complied with the terms of 31 CFR

103.33(g) for a transmittal order sent

prior to April 1, 1998 and on or after the

date of the conversion to the expanded

Fedwire message format of the bank

sending the transmittal order, if

(a) The transmittal order was an order

to which the terms of 31 CFR

103.33(g)(3) would have applied if the

order had been sent prior to the date of

such conversion, and

(b) The terms of 31 CFR 103.33(g)(3)

are satisfied with respect to such order

as if such paragraph continued to apply

by its terms to such transmittal order.

The foregoing exceptions do not in

any way modify the obligations of

financial institutions under any other

provisions of 31 CFR part 103,

including, without limitation, the

obligation to maintain and retrieve

information about transmittals of funds

or the contents of orders for the

transmittals of funds. Terms used in the

foregoing exceptions and not defined in

this document have the meaning given

to such terms in 31 CFR part 103. The

foregoing exceptions may be modified

or revoked at any time in the sole

discretion of the Department of the

Treasury, by document published in the

Federal Register. Exception 1, above,

will expire on May 31, 1999, for

transmittals of funds initiated after that

date, if not revoked or modified with

respect to such expiration date prior to

that time.

III. Paperwork Reduction Act

The collection of information

contained in this issuance has been

reviewed and approved by the Office of

Management and Budget in accordance

with the Paperwork Reduction Act (44

U.S.C. 3507) under control number

1506–0008. An agency may not conduct

or sponsor, and a person is not required

to respond to, a collection of

information unless it displays a valid

control number assigned by the Office of

Management and Budget.

The collection of information in this

issuance is in the Grant of Exceptions

section of this issuance, paragraph 1.(d).

This information is required to comply

with the Bank Secrecy Act. This

information will be used to assure that

a code or ‘‘special’’ name (i.e., a name

other than the transmittor’s true name)

on accounts at banks and with brokers

and dealers in securities are not used to

launder money or hide assets derived

from illegal activities. The collection of

information is mandatory. All

information collected pursuant to the

Bank Secrecy Act, including this

information collection, is confidential

pursuant to 31 U.S.C. 5316(c) and may

be shared with regulatory and law

enforcement authorities but its

availability is strictly limited. All

records required to be retained by 31

CFR part 103 must be retained for five

years.

The likely respondents are banks and

brokers and dealers in securities.

Frequency: Each time a transmittal

order contains a code or special name,

i.e., a name other than the transmittor’s

true name.

Estimated Number of Such

Transmittal Orders: 5,000.

Estimate of Total Annual Burden:

Reporting burden estimate =

approximately 250 hours for

reporting.

Recordkeeping burden estimate =

approximately 1,250 hours for

recordkeeping.

Estimate of Total Annual Cost for

Hour Burdens: Based on $20 per hour,

the total cost of compliance is estimated

to be approximately $33,000.

Estimate of Total Other Annual Costs

to Respondents: None.

FinCEN specifically invites comments

on the following subjects: (a) Whether

the proposed collection of information

is necessary for the proper performance

of the mission of FinCEN, including

whether the information shall have

practical utility; (b) the accuracy of

FinCEN’s estimate of the burden of the

collection of information; (c) ways to

enhance the quality, utility, and clarity

of the information to be collected; and

(d) ways to minimize the burden of the

collection of information on

respondents, including through the use

of automated collection techniques or

other forms of information technology.

In addition, the Paperwork Reduction

Act of 1995 requires agencies to

estimate the total annual cost burden to

respondents or recordkeepers resulting

from the collection of information.

Thus, FinCEN also specifically requests

comments to assist with this estimate. In

this connection, FinCEN requests

commenters to identify any additional

costs associated with the collection of

information. These comments on costs

should be divided into two parts: (1)

Any additional costs associated with

reporting; and (2) any additional costs

associated with recordkeeping.

Comments concerning the accuracy of

the burden estimate and suggestions for

reducing the burden should be directed

to the Office of Management and

Budget, Attention: Desk Officer for the

Treasury Department, Office of

Information and Regulatory Affairs,

Washington, D.C., 20503.

Signed this 16th day of January 1998.

William F. Baity,

Acting Director—FinCEN, Department of the

Treasury.

[FR Doc. 98–1671 Filed 1–23–98; 8:45 am]

BILLING CODE 4820–03–P

POSTAL SERVICE

39 CFR Part 20

International Surface Airlift

AGENCY: Postal Service.

ACTION: Final rule.