67680 Federal Register / Vol. 66, No. 250 / Monday, December 31, 2001 / Rules and Regulations

1Language expanding the scope of the Bank

Secrecy Act to intelligence or counter-intelligence

activities to protect against international terrorism

was added by Section 358 of the USA PATRIOT Act

of 2001.

DEPARTMENT OF THE TREASURY

31 CFR Part 103

RIN 1506–AA25

Financial Crimes Enforcement

Network; Amendment to the Bank

Secrecy Act Regulations—

Requirement That Nonfinancial Trades

or Businesses Report Certain

Currency Transactions

AGENCY: Financial Crimes Enforcement

Network (‘‘FinCEN’’), Treasury.

ACTION: Interim rule.

SUMMARY: This document contains an

interim rule amending the Bank Secrecy

Act regulations to require that persons

who, in the course of conducting a

nonfinancial trade or business, receive

more than $10,000 in coins or currency

in one transaction (or two or more

related transactions), file a report of

such transaction with the Treasury

Department.

DATES: This interim rule is effective as

of January 1, 2002.

FOR FURTHER INFORMATION CONTACT:

Cynthia L. Clark, Deputy Chief Counsel,

or Laurence J. Levine, Attorney-Advisor,

Office of Chief Counsel, FinCEN, (703)

905–3590.

SUPPLEMENTARY INFORMATION:

I. Introduction

This document adds, as an interim

rule, a new section 31 CFR 103.30. The

Interim Rule is adopted to implement

the terms of 31 U.S.C. 5331, which was

added to the Bank Secrecy Act by

section 365 of the Uniting and

Strengthening America by Providing

Appropriate Tools Required to Intercept

and Obstruct Terrorism (USA PATRIOT)

Act of 2001, Public Law 107–56

(October 26, 2001).

II. Statutory Provisions

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, et seq.,

authorizes the Secretary of the Treasury,

inter alia, 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 matters, or

in the conduct of intelligence or

counter-intelligence activities, to protect

against international terrorism, and to

implement counter-money laundering

programs and compliance procedures.1

Regulations implementing Title II of the

Bank Secrecy Act (codified at 31 U.S.C.

5311, et seq.), appear at 31 CFR Part

103. The authority of the Secretary to

administer Title II of the Bank Secrecy

Act has been delegated to the Director

of FinCEN.

Under 31 U.S.C. 5331, any person

who is engaged in a trade or business

and who, in the course of such trade or

business, receives more than $10,000 in

coins or currency in one transaction (or

two or more related transactions) is

required to file a report with respect to

such transaction (or related

transactions) with the Treasury

Department. Reporting under section

5331 does not apply to amounts

received in a transaction reported under

31 U.S.C. 5313 and the accompanying

regulations.

For purposes of section 5331,

currency includes foreign currency, and

to the extent provided in regulations,

any monetary instrument, whether or

not in bearer form, with a face amount

of not more than $10,000. Such

monetary instruments shall not include

any check drawn on the account of the

writer in a financial institution referred

to in subparagraph (A), (B), (C), (D), (E),

(F), (G), (J), (K), (R), or (S) of 31 U.S.C.

5312 (a)(2).

Reports required under section 5331

must be in such form as the Secretary

may prescribe. The reports must

contain: (1) the name, address, and such

other identification information as the

Secretary may require, of the person

from whom the coins or currency was

received; (2) the amount of coins or

currency received; (3) the date and

nature of the transaction; and (4) such

other information, including the

identification of the person filing the

report, as the Secretary may prescribe.

III. Interim Rule

With a minor exception, section 5331

requires reporting of the same

transaction that must be reported to the

Internal Revenue Service (‘‘IRS’’) under

section 6050I of title 26, United States

Code, and 26 CFR 1.6050I–1. Section

5331 does not require reporting of

currency received by clerks of court. Cf.

26 U.S.C. 6050I(g). Further, section 5331

does not require the person making a

report under section 5331 to furnish to

the person whose name is required to be

set forth on the report a statement

concerning the report. Cf. 26 U.S.C.

6050I(e).

Because section 5331 is substantially

similar to 26 U.S.C. 6050I, the Interim

Rule provides that persons required to

report a transaction under section 5331

must make that report by filing a joint

FinCEN/IRS form with the IRS. Under

this dual-reporting regime, only one

form is required to be filed for a

transaction subject to both section 5331

and section 6050I of title 26. Thus, the

Interim Rule imposes no new reporting

or record-keeping burden on persons

required to report certain transactions

under section 5331.

Because of the similarity between the

provisions, FinCEN believes it is

appropriate for the Interim Rule to

adopt the same rules for multiple

payments, monetary instruments, and

designated reporting transactions as

appear in the regulations under section

6050I. Thus, for example, the Interim

Rule requires that recipients aggregate

an initial payment and subsequent

payments such that a report is required

if the aggregation exceeds $10,000

within one year of the initial payment.

In addition, the Interim Rule, like 26

CFR 1.6050I–1, includes within the

definition of currency monetary

instruments such as cashiers’ checks,

bank drafts, traveler’s checks or money

orders, not having a face amount of

more than $10,000, when such

monetary instruments are received in a

‘‘designated reporting transaction,’’ i.e.,

certain retail sales as defined in the

regulation.

IV. Regulatory Flexibility Act

The provisions of the Regulatory

Flexibility Act relating to initial and

final regulatory flexibility analysis (5

U.S.C. 604) are not applicable to this

Interim Rule because FinCEN was not

required to publish a notice of proposed

rulemaking under 5 U.S.C. 553 or any

other law.

V. Paperwork Reduction Act

This regulation is being issued

without prior notice and public

procedure pursuant to the

Administrative Procedure Act (5 U.S.C.

553). For this reason, the collection of

information contained in this regulation

has been reviewed under the

requirements of the Paperwork

Reduction Act (44 U.S.C. 3507(j)) and

approved by the Office of Management

and Budget (OMB) under control

number 1506–0018. 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 OMB.

To submit comments concerning the

collection of information described in

this Interim Rule, please refer to the

companion Notice of Proposed

Rulemaking published elsewhere in this

issue of the Federal Register.

Federal Register / Vol. 66, No. 250 / Monday, December 31, 2001 / Rules and Regulations 67681

VI. Executive Order 12866

The Department of the Treasury has

determined that this Interim Rule is not

a significant regulatory action under

Executive Order 12866.

VII. Unfunded Mandates Act of 1995

Statement

Section 202 of the Unfunded

Mandates Reform Act of 1995, Public

Law 104–4 (Unfunded Mandates Act),

March 22, 1995, requires that an agency

prepare a budgetary impact statement

before promulgating a rule that includes

a federal mandate that may result in

expenditure by state, local, and tribal

governments, in the aggregate, or by the

private sector, of $100 million or more

in any one year. If a budgetary impact

statement is required, section 202 of the

Unfunded Mandates Act also requires

an agency to identify and consider a

reasonable number of regulatory

alternatives before promulgating a rule.

FinCEN has determined that it is not

required to prepare a written statement

under section 202 and has concluded

that on balance this proposal provides

the most cost-effective and least

burdensome alternative to achieve the

objectives of the rule.

VIII. Administrative Procedure Act

Because the Interim Rule implements

the statute, imposes no additional

burden on the public, and addresses the

collection of records that may be

integral in ongoing antiterrorism and

other criminal and regulatory

investigations or proceedings, it is

found to be impracticable, unnecessary,

and contrary to the public interest to

comply with notice and public

procedure under 5 U.S.C. 553(b). For

these reasons, the Interim Rule is made

effective before 30 days have passed

after its publication date. See 5 U.S.C.

553(d).

List of Subjects in 31 CFR Part 103

Authority delegations (Government

agencies), Banks and banking, Currency,

Investigations, Law enforcement,

Reporting and recordkeeping

requirements.

Amendments to the Regulations

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

is revised to read as follows:

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

31 U.S.C. 5311–5331.

2. A new § 103.30 is added to subpart

B to read as follows:

§ 103.30 Reports relating to currency in

excess of $10,000 received in a trade or

business.

(a) Reporting requirement—(1)

Reportable transactions—(i) In general.

Any person (solely for purposes of

section 5331 of title 31, United States

Code and this section, ‘‘person’’ shall

have the same meaning as under 26

U.S.C. 7701 (a)(1)) who, in the course of

a trade or business in which such

person is engaged, receives currency in

excess of $10,000 in 1 transaction (or 2

or more related transactions) shall,

except as otherwise provided, make a

report of information with respect to the

receipt of currency. This section does

not apply to amounts received in a

transaction reported under 31 U.S.C.

5313 and § 103.22.

(ii) Certain financial transactions.

Section 6050I of title 26 of the United

States Code requires persons to report

information about financial transactions

to the IRS, and 31 U.S.C. 5331 requires

persons to report similar information

about certain transactions to the

Financial Crimes Enforcement Network.

This information shall be reported on

the same form as prescribed by the

Secretary.

(2) Currency received for the account

of another. Currency in excess of

$10,000 received by a person for the

account of another must be reported

under this section. Thus, for example, a

person who collects delinquent

accounts receivable for an automobile

dealer must report with respect to the

receipt of currency in excess of $10,000

from the collection of a particular

account even though the proceeds of the

collection are credited to the account of

the automobile dealer (i.e., where the

rights to the proceeds from the account

are retained by the automobile dealer

and the collection is made on a fee-forservice basis).

(3) Currency received by agents—(i)

General rule. Except as provided in

paragraph (a)(3)(ii) of this section, a

person who in the course of a trade or

business acts as an agent (or in some

other similar capacity) and receives

currency in excess of $10,000 from a

principal must report the receipt of

currency under this section.

(ii) Exception. An agent who receives

currency from a principal and uses all

of the currency within 15 days in a

currency transaction (the ‘‘second

currency transaction’’) which is

reportable under section 5312 of title 31,

or 31 U.S.C. 5331 and this section, and

who discloses the name, address, and

taxpayer identification number of the

principal to the recipient in the second

currency transaction need not report the

initial receipt of currency under this

section. An agent will be deemed to

have met the disclosure requirements of

this paragraph (a)(3)(ii) if the agent

discloses only the name of the principal

and the agent knows that the recipient

has the principal’s address and taxpayer

identification number.

(iii) Example. The following example

illustrates the application of the rules in

paragraphs (a)(3)(i) and (ii) of this

section:

Example. B, the principal, gives D, an

attorney, $75,000 in currency to purchase

real property on behalf of B. Within 15 days

D purchases real property for currency from

E, a real estate developer, and discloses to E,

B’s name, address, and taxpayer

identification number. Because the

transaction qualifies for the exception

provided in paragraph (a)(3)(ii) of this

section, D need not report with respect to the

initial receipt of currency under this section.

The exception does not apply, however, if D

pays E by means other than currency, or

effects the purchase more than 15 days

following receipt of the currency from B, or

fails to disclose B’s name, address, and

taxpayer identification number (assuming D

does not know that E already has B’s address

and taxpayer identification number), or

purchases the property from a person whose

sale of the property is not in the course of

that person’s trade or business. In any such

case, D is required to report the receipt of

currency from B under this section.

(b) Multiple payments. The receipt of

multiple currency deposits or currency

installment payments (or other similar

payments or prepayments) relating to a

single transaction (or two or more

related transactions), is reported as set

forth in paragraphs (b)(1) through (b)(3)

of this section.

(1) Initial payment in excess of $10,000.

If the initial payment exceeds $10,000,

the recipient must report the initial

payment within 15 days of its receipt.

(2) Initial payment of $10,000 or less.

If the initial payment does not exceed

$10,000, the recipient must aggregate

the initial payment and subsequent

payments made within one year of the

initial payment until the aggregate

amount exceeds $10,000, and report

with respect to the aggregate amount

within 15 days after receiving the

payment that causes the aggregate

amount to exceed $10,000.

(3) Subsequent payments. In addition

to any other required report, a report

must be made each time that previously

unreportable payments made within a

12-month period with respect to a single

transaction (or two or more related

transactions), individually or in the

67682 Federal Register / Vol. 66, No. 250 / Monday, December 31, 2001 / Rules and Regulations

aggregate, exceed $10,000. The report

must be made within 15 days after

receiving the payment in excess of

$10,000 or the payment that causes the

aggregate amount received in the 12-

month period to exceed $10,000. (If

more than one report would otherwise

be required for multiple currency

payments within a 15-day period that

relate to a single transaction (or two or

more related transactions), the recipient

may make a single combined report

with respect to the payments. The

combined report must be made no later

than the date by which the first of the

separate reports would otherwise be

required to be made.)

(4) Example. The following example

illustrates the application of the rules in

paragraphs (b)(1) through (b)(3) of this

section:

Example. On January 10, Year 1, M

receives an initial payment in currency of

$11,000 with respect to a transaction. M

receives subsequent payments in currency

with respect to the same transaction of

$4,000 on February 15, Year 1, $6,000 on

March 20, Year 1, and $12,000 on May 15,

Year 1. M must make a report with respect

to the payment received on January 10, Year

1, by January 25, Year 1. M must also make

a report with respect to the payments totaling

$22,000 received from February 15, Year 1,

through May 15, Year 1. This report must be

made by May 30, Year 1, that is, within 15

days of the date that the subsequent

payments, all of which were received within

a 12-month period, exceeded $10,000.

(c) Meaning of terms. The following

definitions apply for purposes of this

section—

(1) Currency. Solely for purposes of 31

U.S.C. 5331 and this section, currency

means—

(i) The coin and currency of the

United States or of any other country,

which circulate in and are customarily

used and accepted as money in the

country in which issued; and

(ii) A cashier’s check (by whatever

name called, including ‘‘treasurer’s

check’’ and ‘‘bank check’’), bank draft,

traveler’s check, or money order having

a face amount of not more than

$10,000—

(A) Received in a designated reporting

transaction as defined in paragraph

(c)(2) of this section (except as provided

in paragraphs (c)(3), (4), and (5) of this

section), or

(B) Received in any transaction in

which the recipient knows that such

instrument is being used in an attempt

to avoid the reporting of the transaction

under section 5331 and this section.

(2) Designated reporting transaction.

A designated reporting transaction is a

retail sale (or the receipt of funds by a

broker or other intermediary in

connection with a retail sale) of—

(i) A consumer durable, (ii) A

collectible, or

(iii) A travel or entertainment activity.

(3) Exception for certain loans. A

cashier’s check, bank draft, traveler’s

check, or money order received in a

designated reporting transaction is not

treated as currency pursuant to

paragraph (c)(1)(ii)(A) of this section if

the instrument constitutes the proceeds

of a loan from a bank. The recipient may

rely on a copy of the loan document, a

written statement from the bank, or

similar documentation (such as a

written lien instruction from the issuer

of the instrument) to substantiate that

the instrument constitutes loan

proceeds.

(4) Exception for certain installment

sales. A cashier’s check, bank draft,

traveler’s check, or money order

received in a designated reporting

transaction is not treated as currency

pursuant to paragraph (c)(1)(ii)(A) of

this section if the instrument is received

in payment on a promissory note or an

installment sales contract (including a

lease that is considered to be a sale for

Federal income tax purposes). However,

the preceding sentence applies only if—

(i) Promissory notes or installment

sales contracts with the same or

substantially similar terms are used in

the ordinary course of the recipient’s

trade or business in connection with

sales to ultimate consumers; and

(ii) The total amount of payments

with respect to the sale that are received

on or before the 60th day after the date

of the sale does not exceed 50 percent

of the purchase price of the sale.

(5) Exception for certain down

payment plans. A cashier’s check, bank

draft, traveler’s check, or money order

received in a designated reporting

transaction is not treated as currency

pursuant to paragraph (c)(1)(ii)(A) of

this section if the instrument is received

pursuant to a payment plan requiring

one or more down payments and the

payment of the balance of the purchase

price by a date no later than the date of

the sale (in the case of an item of travel

or entertainment, a date no later than

the earliest date that any item of travel

or entertainment pertaining to the same

trip or event is furnished). However, the

preceding sentence applies only if—

(i) The recipient uses payment plans

with the same or substantially similar

terms in the ordinary course of its trade

or business in connection with sales to

ultimate consumers; and

(ii) The instrument is received more

than 60 days prior to the date of the sale

(in the case of an item of travel or

entertainment, the date on which the

final payment is due).

(6) Examples. The following examples

illustrate the definition of ‘‘currency’’

set forth in paragraphs (c)(l) through

(c)(5) of this section:

Example 1. D, an individual, purchases

gold coins from M, a coin dealer, for $13,200.

D tenders to M in payment United States

currency in the amount of $6,200 and a

cashier’s check in the face amount of $7,000

which D had purchased. Because the sale is

a designated reporting transaction, the

cashier’s check is treated as currency for

purposes of 31 U.S.C. 5331 and this section.

Therefore, because M has received more than

$10,000 in currency with respect to the

transaction, M must make the report required

by 31 U.S.C. 5331 and this section.

Example 2. E, an individual, purchases an

automobile from Q, an automobile dealer, for

$11,500. E tenders to Q in payment United

States currency in the amount of $2,000 and

a cashier’s check payable to E and Q in the

amount of $9,500. The cashier’s check

constitutes the proceeds of a loan from the

bank issuing the check. The origin of the

proceeds is evident from provisions inserted

by the bank on the check that instruct the

dealer to cause a lien to be placed on the

vehicle as security for the loan. The sale of

the automobile is a designated reporting

transaction. However, under paragraph (c)(3)

of this section, because E has furnished Q

documentary information establishing that

the cashier’s check constitutes the proceeds

of a loan from the bank issuing the check, the

cashier’s check is not treated as currency

pursuant to paragraph (c)(1)(ii)(A) of this

section.

Example 3. F, an individual, purchases an

item of jewelry from S, a retail jeweler, for

$12,000. F gives S traveler’s checks totaling

$2,400 and pays the balance with a personal

check payable to S in the amount of $9,600.

Because the sale is a designated reporting

transaction, the traveler’s checks are treated

as currency for purposes of section 5331 and

this section. However, because the personal

check is not treated as currency for purposes

of section 5331 and this section, S has not

received more than $10,000 in currency in

the transaction and no report is required to

be filed under section 5331 and this section.

Example 4. G, an individual, purchases a

boat from T, a boat dealer, for $16,500. G

pays T with a cashier’s check payable to T

in the amount of $16,500. The cashier’s

check is not treated as currency because the

face amount of the check is more than

$10,000. Thus, no report is required to be

made by T under section 5331 and this

section.

Example 5. H, an individual, arranges with

W, a travel agent, for the chartering of a

passenger aircraft to transport a group of

individuals to a sports event in another city.

H also arranges with W for hotel

accommodations for the group and for

admission tickets to the sports event. In

payment, H tenders to W money orders

which H had previously purchased. The total

amount of the money orders, none of which

individually exceeds $10,000 in face amount,

exceeds $10,000. Because the transaction is

a designated reporting transaction, the money

orders are treated as currency for purposes of

Federal Register / Vol. 66, No. 250 / Monday, December 31, 2001 / Rules and Regulations 67683

section 5331 and this section. Therefore,

because W has received more than $10,000

in currency with respect to the transaction,

W must make the report required by section

5331 and this section.

(7) Consumer durable. The term

consumer durable means an item of

tangible personal property of a type that

is suitable under ordinary usage for

personal consumption or use, that can

reasonably be expected to be useful for

at least 1 year under ordinary usage, and

that has a sales price of more than

$10,000. Thus, for example, a $20,000

automobile is a consumer durable

(whether or not it is sold for business

use), but a $20,000 dump truck or a

$20,000 factory machine is not.

(8) Collectible. The term collectible

means an item described in paragraphs

(A) through (D) of section 408 (m)(2) of

title 26 of the United States Code

(determined without regard to section

408 (m)(3) of title 26 of the United

States Code).

(9) Travel or entertainment activity.

The term travel or entertainment

activity means an item of travel or

entertainment (within the meaning of 26

CFR 1.274–2(b)(1)) pertaining to a single

trip or event where the aggregate sales

price of the item and all other items

pertaining to the same trip or event that

are sold in the same transaction (or

related transactions) exceeds $10,000.

(10) Retail sale. The term retail sale

means any sale (whether for resale or for

any other purpose) made in the course

of a trade or business if that trade or

business principally consists of making

sales to ultimate consumers.

(11) Trade or business. The term trade

or business has the same meaning as

under section 162 of title 26, United

States Code.

(12) Transaction. (i) Solely for

purposes of 31 U.S.C. 5331 and this

section, the term transaction means the

underlying event precipitating the

payer’s transfer of currency to the

recipient. In this context, transactions

include (but are not limited to) a sale of

goods or services; a sale of real property;

a sale of intangible property; a rental of

real or personal property; an exchange

of currency for other currency; the

establishment or maintenance of or

contribution to a custodial, trust, or

escrow arrangement; a payment of a

preexisting debt; a conversion of

currency to a negotiable instrument; a

reimbursement for expenses paid; or the

making or repayment of a loan. A

transaction may not be divided into

multiple transactions in order to avoid

reporting under this section.

(ii) The term related transactions

means any transaction conducted

between a payer (or its agent) and a

recipient of currency in a 24-hour

period. Additionally, transactions

conducted between a payer (or its agent)

and a currency recipient during a period

of more than 24 hours are related if the

recipient knows or has reason to know

that each transaction is one of a series

of connected transactions.

(iii) The following examples illustrate

the definition of paragraphs (c)(12) (i)

and (ii) of this section:

Example 1. A person has a tacit agreement

with a gold dealer to purchase $36,000 in

gold bullion. The $36,000 purchase

represents a single transaction under

paragraph (c)(12)(i) of this section and the

reporting requirements of this section cannot

be avoided by recasting the single sales

transaction into 4 separate $9,000 sales

transactions.

Example 2. An attorney agrees to represent

a client in a criminal case with the attorney’s

fee to be determined on an hourly basis. In

the first month in which the attorney

represents the client, the bill for the

attorney’s services comes to $8,000 which the

client pays in currency. In the second month

in which the attorney represents the client,

the bill for the attorney’s services comes to

$4,000, which the client again pays in

currency. The aggregate amount of currency

paid ($12,000) relates to a single transaction

as defined in paragraph (c)(12)(i) of this

section, the sale of legal services relating to

the criminal case, and the receipt of currency

must be reported under this section.

Example 3. A person intends to contribute

a total of $45,000 to a trust fund, and the

trustee of the fund knows or has reason to

know of that intention. The $45,000

contribution is a single transaction under

paragraph (c)(12)(i) of this section and the

reporting requirement of this section cannot

be avoided by the grantor’s making five

separate $9,000 contributions of currency to

a single fund or by making five $9,000

contributions of currency to five separate

funds administered by a common trustee.

Example 4. K, an individual, attends a one

day auction and purchases for currency two

items, at a cost of $9,240 and $1,732.50

respectively (tax and buyer’s premium

included). Because the transactions are

related transactions as defined in paragraph

(c)(12)(ii) of this section, the auction house

is required to report the aggregate amount of

currency received from the related sales

($10,972.50), even though the auction house

accounts separately on its books for each

item sold and presents the purchaser with

separate bills for each item purchased.

Example 5. F, a coin dealer, sells for

currency $9,000 worth of gold coins to an

individual on three successive days. Under

paragraph (c)(12)(ii) of this section the three

$9,000 transactions are related transactions

aggregating $27,000 if F knows, or has reason

to know, that each transaction is one of a

series of connected transactions.

(13) Recipient. (i) The term recipient

means the person receiving the

currency. Except as provided in

paragraph (c)(13)(ii) of this section, each

store, division, branch, department,

headquarters, or office (‘‘branch’’)

(regardless of physical location)

comprising a portion of a person’s trade

or business shall for purposes of this

section be deemed a separate recipient.

(ii) A branch that receives currency

payments will not be deemed a separate

recipient if the branch (or a central unit

linking such branch with other

branches) would in the ordinary course

of business have reason to know the

identity of payers making currency

payments to other branches of such

person.

(iii) Examples. The following

examples illustrate the application of

the rules in paragraphs (c)(13)(i) and (ii)

of this section:

Example 1. N, an individual, purchases

regulated futures contracts at a cost of $7,500

and $5,000, respectively, through two

different branches of Commodities Broker X

on the same day. N pays for each purchase

with currency. Each branch of Commodities

Broker X transmits the sales information

regarding each of N’s purchases to a central

unit of Commodities Broker X (which settles

the transactions against N’s account). Under

paragraph (c)(13)(ii) of this section the

separate branches of Commodities Broker X

are not deemed to be separate recipients;

therefore, Commodities Broker X must report

with respect to the two related regulated

futures contracts sales in accordance with

this section.

Example 2. P, a corporation, owns and

operates a racetrack. P’s racetrack contains

100 betting windows at which pari-mutuel

wagers may be made. R, an individual, places

currency wagers of $3,000 each at five

separate betting windows. Assuming that in

the ordinary course of business each betting

window (or a central unit linking windows)

does not have reason to know the identity of

persons making wagers at other betting

windows, each betting window would be

deemed to be a separate currency recipient

under paragraph (c)(13)(i) of this section. As

no individual recipient received currency in

excess of $10,000, no report need be made by

P under this section.

(d) Exceptions to the reporting

requirements of 31 U.S.C. 5331—(1)

Receipt of currency by certain casinos

having gross annual gaming revenue in

excess of $1,000,000—(i) In general. If a

casino receives currency in excess of

$10,000 and is required to report the

receipt of such currency directly to the

Treasury Department under §§ 103.22

(a)(2) and 103.25 and is subject to the

recordkeeping requirements of § 103.36,

then the casino is not required to make

a report with respect to the receipt of

such currency under 31 U.S.C. 5331 and

this section.

(ii) Casinos exempt under § 103.55(c).

Pursuant to § 103.55, the Secretary may

exempt from the reporting and

recordkeeping requirements under

§§ 103.22, 103.25 and 103.36 casinos in

67684 Federal Register / Vol. 66, No. 250 / Monday, December 31, 2001 / Rules and Regulations

any state whose regulatory system

substantially meets the reporting and

recordkeeping requirements of this part.

Such casinos shall not be required to

report receipt of currency under 31

U.S.C. 5331 and this section.

(iii) Reporting of currency received in

a nongaming business. Nongaming

businesses (such as shops, restaurants,

entertainment, and hotels) at casino

hotels and resorts are separate trades or

businesses in which the receipt of

currency in excess of $10,000 is

reportable under section 5331 and these

regulations. Thus, a casino exempt

under paragraph (d)(1)(i) or (ii) of this

section must report with respect to

currency in excess of $10,000 received

in its nongaming businesses.

(iv) Example. The following example

illustrates the application of the rules in

paragraphs (d)(2) (i) and (iii) of this

section:

Example. A and B are casinos having gross

annual gaming revenue in excess of

$1,000,000. C is a casino with gross annual

gaming revenue of less than $1,000,000.

Casino A receives $15,000 in currency from

a customer with respect to a gaming

transaction which the casino reports to the

Treasury Department under §§ 103.22(a)(2)

and 103.25. Casino B receives $15,000 in

currency from a customer in payment for

accommodations provided to that customer

at Casino B’s hotel. Casino C receives $15,000

in currency from a customer with respect to

a gaming transaction. Casino A is not

required to report the transaction under 31

U.S.C. 5331 or this section because the

exception for certain casinos provided in

paragraph (d)(1)(i) of this section (‘‘the casino

exception’’) applies. Casino B is required to

report under 31 U.S.C. 5331 and this section

because the casino exception does not apply

to the receipt of currency from a nongaming

activity. Casino C is required to report under

31 U.S.C. 5331 and this section because the

casino exception does not apply to casinos

having gross annual gaming revenue of

$1,000,000 or less which do not have to

report to the Treasury Department under

§§ 103.22(a)(2) and 103.25.

(2) Receipt of currency not in the

course of the recipient’s trade or

business. The receipt of currency in

excess of $10,000 by a person other than

in the course of the person’s trade or

business is not reportable under 31

U.S.C. 5331. Thus, for example, F, an

individual in the trade or business of

selling real estate, sells a motorboat for

$12,000, the purchase price of which is

paid in currency. F did not use the

motorboat in any trade or business in

which F was engaged. F is not required

to report under 31 U.S.C. 5331 or this

section because the exception provided

in this paragraph (d)(2) applies.

(3) Receipt is made with respect to a

foreign currency transaction—(i) In

general. Generally, there is no

requirement to report with respect to a

currency transaction if the entire

transaction occurs outside the United

States (the fifty states and the District of

Columbia). An entire transaction

consists of both the transaction as

defined in paragraph (c)(12)(i) of this

section and the receipt of currency by

the recipient. If, however, any part of an

entire transaction occurs in the

Commonwealth of Puerto Rico or a

possession or territory of the United

States and the recipient of currency in

that transaction is subject to the general

jurisdiction of the Internal Revenue

Service under title 26 of the United

States Code, the recipient is required to

report the transaction under this

section.

(ii) Example. The following example

illustrates the application of the rules in

paragraph (d)(3)(i) of this section:

Example. W, an individual engaged in the

trade or business of selling aircraft, reaches

an agreement to sell an airplane to a U.S.

citizen living in Mexico. The agreement, no

portion of which is formulated in the United

States, calls for a purchase price of $125,000

and requires delivery of and payment for the

airplane to be made in Mexico. Upon

delivery of the airplane in Mexico, W

receives $125,000 in currency. W is not

required to report under 31 U.S.C. 5331 or

this section because the exception provided

in paragraph (d)(3)(i) of this section (‘‘foreign

transaction exception’’) applies. If, however,

any part of the agreement to sell had been

formulated in the United States, the foreign

transaction exception would not apply and

W would be required to report the receipt of

currency under 31 U.S.C. 5331 and this

section.

(e) Time, manner, and form of

reporting—(1) In general. The reports

required by paragraph (a) of this section

must be made by filing a Form 8300, as

specified in 26 CFR 1.6050I–1(e)(2). The

reports must be filed at the time and in

the manner specified in 26 CFR

1.6050I–1(e)(1) and (3) respectively.

(2) Verification. A person making a

report of information under this section

must verify the identity of the person

from whom the reportable currency is

received. Verification of the identity of

a person who purports to be an alien

must be made by examination of such

person’s passport, alien identification

card, or other official document

evidencing nationality or residence.

Verification of the identity of any other

person may be made by examination of

a document normally acceptable as a

means of identification when cashing or

accepting checks (for example, a driver’s

license or a credit card). In addition, a

report will be considered incomplete if

the person required to make a report

knows (or has reason to know) that an

agent is conducting the transaction for

a principal, and the return does not

identify both the principal and the

agent.

(3) Retention of reports. A person

required to make a report under this

section must keep a copy of each report

filed for five years from the date of

filing.

Dated: December 20, 2001.

James F. Sloan,

Director, Financial Crimes Enforcement

Network.

[FR Doc. 01–31846 Filed 12–28–01; 8:45 am]

BILLING CODE 4820–03–P