63382 Federal Register / Vol. 75, No. 199 / Friday, October 15, 2010 / Rules and Regulations 

1Amendments to the Bank Secrecy Act 

Regulations; Defining Mutual Funds as Financial 

Institutions, 75 FR 19241 (April 14, 2010). 

2See 31 CFR 103.11(n)(10) (general definition of 

‘‘financial institution’’). The BSA is codified in part 

at 31 U.S.C. 5311 et seq. Rules implementing the 

BSA are codified at 31 CFR part 103. 

3See 31 CFR 103.33(f) and (g). Financial 

institutions must retain records for a period of five 

years. 31 CFR103.38(d). 

4Rules 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.’’ 

5See 31 CFR 103.33(f)(1)(i) and (f)(2). 

6See 31 CFR 103.33(f)(3) (information that the 

recipient’s financial institution must obtain or 

retain). 

7See 31 CFR 103.33(g) (information that must 

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

103.11(kk) (defining ‘‘transmittal order’’). 

Additionally, the Final Rule includes 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. See 

31 CFR 103.33(e)(6)(i) and 31 CFR 103.33(f)(6)(i). 

Further, 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. See 31 

CFR 103.33(a)–(c). Financial institutions must 

retain these records for a period of five years. 31 

CFR 103.38(d). 

8See, e.g., 15 U.S.C. 80a–30 (mutual funds); 15 

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

9Amendment to Bank Secrecy Act Regulations; 

Defining Mutual Funds as Financial Institutions, 74 

FR 26996, 26998 (June 5, 2009). 

10See 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). 

Issued in Washington, DC, on this 12th day 

of October 2010. 

Vincent K. Snowbarger, 

Deputy Director for Operations, Pension 

Benefit Guaranty Corporation. 

[FR Doc. 2010–26081 Filed 10–14–10; 8:45 am] 

BILLING CODE 7709–01–P 

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; 

Extension of Compliance Date 

AGENCY: Financial Crimes Enforcement 

Network (‘‘FinCEN’’), Treasury. 

ACTION: Final rule; extension of 

compliance date. 

SUMMARY: FinCEN is issuing this final 

rule extending the compliance date for 

those provisions in 31 CFR 103.33 that 

apply to mutual funds. On April 14, 

2010, FinCEN issued a final rule that 

included mutual funds within the 

general definition of ‘‘financial 

institution’’ in regulations implementing 

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

rule subjects mutual funds to 31 CFR 

103.33, which requires the creation, 

retention, and transmittal of records or 

information for transmittals of funds. 

FinCEN is extending, from January 10, 

2011 to April 10, 2011, the date on 

which mutual funds must begin to 

comply with 31 CFR 103.33. 

DATES: This final rule is effective on 

October 15, 2010. The compliance date 

for 31 CFR 103.33 is extended from 

January 10, 2011 to April 10, 2011. 

FOR FURTHER INFORMATION CONTACT: The 

FinCEN regulatory helpline at (800) 

949–2732. 

SUPPLEMENTARY INFORMATION: 

I. Background 

On April 14, 2010, FinCEN published 

a final rule 1 to include mutual funds 

within the general definition of 

‘‘financial institution’’ in regulations 

implementing the BSA (the ‘‘Final 

Rule’’).2 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 antimoney 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 as the Federal functional 

regulator of mutual funds. 

Section 103.33—The Recordkeeping 

and Travel Rule and Related 

Recordkeeping Requirements 

The Final Rule subjects mutual funds 

to requirements relating to the creation 

and retention of records for transmittals 

of funds, and the requirement to 

transmit information on these 

transactions to other financial 

institutions in the payment chain 

(‘‘Recordkeeping and Travel Rule’’).3

The Recordkeeping and Travel Rule 

applies to transmittals of funds in 

amounts that equal or exceed $3,000,4

and requires the transmittor’s financial 

institution to obtain and retain name, 

address, and other information on the 

transmittor and the transaction.5

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.6 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.7

Mutual funds are subject to record 

retention requirements under the 

Investment Company Act of 1940, and 

mutual fund transfer agents are subject 

to recordkeeping requirements under 

the Securities Exchange Act of 1934.8 In 

light of these existing regulatory 

obligations, FinCEN stated in the notice 

of proposed rulemaking 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.9 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.10

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. All 

commenters requested additional time 

to comply with the Recordkeeping and 

Travel Rule. Commenters stated that 

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 determined that extending the 

compliance date with respect to the 

requirements of the Recordkeeping and 

Travel Rule to 270 days after the rule 

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Federal Register / Vol. 75, No. 199 / Friday, October 15, 2010 / Rules and Regulations 63383 

11The ICI is an association of U.S. investment 

companies, including mutual funds, closed-end 

funds, exchange-traded funds (ETFs), and unit 

investment trusts (UITs). Members of ICI manage 

total assets of $11.42 trillion and serve 90 million 

shareholders. 

12According to the ICI, most mutual funds and 

transfer agents refrain from implementing material 

modifications or enhancements to their transaction 

processing and recordkeeping systems for varying 

periods beginning in early December (generally 

referred to as a ‘‘freeze’’) to ensure that the systems 

are capable of handling the large number of endof-year fund and shareholder transactions, as well 

as the preparation of year-end account statements 

and tax reporting information. Because the January 

10, 2011 compliance date falls within the period 

when mutual fund transaction processing and 

recordkeeping systems are frozen, mutual funds 

will need to come into compliance with the 

Recordkeeping and Travel Rule by the middle of 

November 2010—before the systems are frozen. A 

three-month extension of the compliance date 

would allow mutual funds sufficient time to come 

into compliance with the Recordkeeping and Travel 

Rule without disrupting the year-end operations 

and reporting functions. 

13According to the ICI, mutual fund transfer 

agents are currently redesigning their systems in 

order to comply with new cost basis reporting 

requirements, which entail significant operational 

and technological changes to allow funds to 

capture, report, and transfer required tax 

information, such as when shareholders transfer 

their accounts (see Basis Reporting by Securities 

Brokers and Basis Determination for Stock, 74 FR 

67010 (Dec. 17, 2009)). In addition, mutual funds 

and their transfer agents are updating their systems 

to comply with a new requirement that money 

market mutual funds and their transfer agents be 

able to process purchases and redemptions 

electronically at a price other than $1.00 per share 

(see Money Market Fund Reform, SEC Release No. 

IC–29132 (Jan. 27, 2010)). 

14See 5 U.S.C. 553(b)(3)(B) (an agency may 

dispense without prior notice and comment when 

it finds, for good cause, that notice and comment 

are ‘‘impracticable, unnecessary, and contrary to the 

public interest’’). The change to the compliance date 

is effective upon publication in the Federal 

Register. The Administrative Procedure Act allows 

effective dates less than 30 days after publication 

in the Federal Register for ‘‘a substantive rule 

which grants or recognizes an exemption or relieves 

a restriction.’’ See 5 U.S.C. 553(d)(1). 

was published in the Federal Register 

(January 10, 2011) was appropriate. 

On July 13, 2010, the Investment 

Company Institute (‘‘ICI’’) 11 submitted a 

letter stating that it will be difficult for 

its members to comply with the 

Recordkeeping and Travel Rule by 

January 10, 2011. Due to unique 

industry end-of-year systems issues,12 as 

well as systems changes necessitated by 

other new regulatory requirements,13

the ICI has requested a three month 

extension of the date by which mutual 

funds are required to comply with the 

requirements of the Recordkeeping and 

Travel Rule. 

II. Extension of Compliance Date for the 

Recordkeeping and Travel Rule 

FinCEN believes that it is appropriate 

to extend the date by which mutual 

funds must comply with the 

Recordkeeping and Travel Rule. 

Therefore, mutual funds now will have 

until April 10, 2011 to comply with 31 

CFR 103.33. We do not anticipate 

granting a further extension beyond 

April 10, 2011 and expect that mutual 

funds thereafter will have adequate 

processes in place to comply with the 

Recordkeeping and Travel Rule. 

III. Proposed Location in Chapter X 

As discussed in a previous Federal 

Register Notice, 73 FR 66414, Nov. 7, 

2008, 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). If the 

notice of proposed rulemaking for 

Chapter X is finalized, the changes in 

the present rule would be reorganized 

according to the proposed Chapter X. 

The planned reorganization will have 

no substantive effect on the regulatory 

changes herein. The regulatory changes 

of this specific rulemaking would be 

renumbered according to the proposed 

Chapter X as follows: § 103.33 would be 

moved to § 1010.410. 

IV. Notice and Comment Under the 

Administrative Procedure Act 

FinCEN for good cause finds that, for 

the reasons cited above, including the 

brief length of the extension we are 

granting, notice and solicitation of 

comment regarding the extension of the 

compliance date are impracticable, 

unnecessary and contrary to the public 

interest. In this regard, FinCEN notes 

that mutual funds need to be informed 

as soon as possible of the extension and 

its length in order to plan and adjust 

their implementation processes 

accordingly.14

Dated: October 6, 2010. 

James H. Freis, Jr., 

Director, Financial Crimes Enforcement 

Network. 

[FR Doc. 2010–25886 Filed 10–14–10; 8:45 am] 

BILLING CODE 4810–02–P 

DEPARTMENT OF DEFENSE 

Office of the Secretary 

32 CFR Part 199 

[DOD–2008–HA–0029] 

RIN 0720–AB45 

Civilian Health and Medical Program of 

the Uniformed Services (CHAMPUS)/ 

TRICARE: Inclusion of TRICARE Retail 

Pharmacy Program in Federal 

Procurement of Pharmaceuticals 

AGENCY: Office of the Secretary, 

Department of Defense (DoD). 

ACTION: Final rule. 

SUMMARY: Section 703 of the National 

Defense Authorization Act for Fiscal 

Year 2008 (NDAA–08) states with 

respect to any prescription filled on or 

after the date of enactment, the 

TRICARE Retail Pharmacy Program 

shall be treated as an element of the 

DoD for purposes of procurement of 

drugs by Federal agencies under section 

8126 of title 38, United States Code 

(U.S.C.), to the extent necessary to 

ensure pharmaceuticals paid for by the 

DoD that are provided by network retail 

pharmacies under the program to 

eligible covered beneficiaries are subject 

to the pricing standards in such section 

8126. DoD issued a final rule on March 

17, 2009, implementing the law. On 

November 30, 2009, the U.S. District 

Court for the District of Columbia 

remanded the final rule to DoD (without 

vacating the rule) for DoD to consider in 

its discretion whether to readopt the 

current iteration of the rule or adopt 

another approach. This final rule is the 

product of that reconsideration. DoD is 

readopting the 2009 final rule, with 

some revision. 

DATES: This final rule is effective 

December 27, 2010. 

FOR FURTHER INFORMATION CONTACT: Rear 

Admiral Thomas McGinnis, Chief, 

Pharmacy Operations Directorate, 

TRICARE Management Activity, 

telephone 703–681–2890. 

SUPPLEMENTARY INFORMATION: 

A. Background 

Section 703 of the National Defense 

Authorization Act for Fiscal Year 2008 

(NDAA–08) (Pub. L. 110–181) enacted 

10 U.S.C. 1074g(f). It provides that with 

respect to any prescription filled on or 

after the date of enactment (January 28, 

2008), the TRICARE Retail Pharmacy 

Program shall be treated as an element 

of DoD for purposes of the procurement 

of drugs by Federal agencies under 38 

U.S.C. 8126 to the extent necessary to 

ensure pharmaceuticals paid for by DoD 

that are provided by network retail 

pharmacies to TRICARE beneficiaries 

are subject to Federal Ceiling Prices 

(FCPs). This section 8126 established 

FCPs for covered drugs (requiring a 

minimum 24% discount) procured by 

DoD and three other agencies from 

manufacturers. The NDAA required 

implementing regulations. 

DoD issued a proposed rule July 25, 

2008 (73 FR 43394–97) and a final rule 

March 17, 2009 (74 FR 11279–93). 

Among other things, the preamble to the 

final rule stated that DoD interpreted the 

statute as automatically capping the 

price manufacturers may get paid for 

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