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I. AN OVERVIEW OF THE CURRENCY AND FOREIGN TRANSACTIONS REPORTING REGULATIONS

This is intended as a general summary of the
new rules relating to reports and recordkeeping.
The Act itself and the pertinent regulations,
found at the back of this booklet, are the gov-
erning texts and they should be examined for
detailed reliance.

The new requirements of the Currency and Foreign Transactions Reporting Act of 1970 will not require any changes in the recordkeeping procedures of many financial institutions. The new regulations will not interfere with the normal transaction of business by banks, securities dealers, other financial institutions, or private citizens. Under this legislation and the regulations issued by the Treasury Department effective July 1, 1972, financial institutions may be required to retain records for a longer period of time than has been their practice. Access by the Government to these records will continue to be subject to the requirements of existing law regarding subpoenas and other legal processes.

The new regulations do not subject the normal banking transactions of private citizens to Government scrutiny.

A.

Those Affected By Act And Regulations Those subject to the Act and regulations include the following financial institutions: commercial banks or trust companies, private banks, savings and loan associations, building and loan associations, federally-insured institutions, savings banks, industrial banks, credit unions, organizations chartered under the banking laws of a state, representatives of foreign banks located in the United States, brokers and dealers in securities, dealers in foreign exchange, issuers of travelers' checks and money orders, credit card systems, and those who transmit funds abroad for others. The regulations do not affect branches of United States Banks located outside the United States nor foreign banks or branches not located in the United States.

Under the regulations, the term "United States" means the various states, the District of Columbia, the Commonwealth of Puerto Rico, and the territories and possessions of the United States.

In addition, individuals, corporations and other legal personalities are required in certain circumstances to make reports of transactions in and transportation of circulating coin and currency, travelers' checks, money orders, investment securities and negotiable instruments in bearer form. Some of the requirements relate to transactions between persons in the United States and in foreign countries, and others relate to purely domestic transactions.

B. Reports of Currency Transactions By Financial Institutions

When any person engages in a currency transaction of more than $10,000 with a financial institution, the financial institution must record the identity of the person or persons involved and file a report containing certain details of the transaction within 45 days (Regulations Sections 103.22, 103.25(a) and 103.26).

C. Reports of Transportation of Currency or Monetary Instruments By Persons

Any person who is responsible for the physical transportation of more than $5,000 in currency or certain monetary instruments at any one time into or out of the United States must file a report thereof at the time of departure, mailing or shipping (Regulations Sections 103.23(a) and 103.25(b)).

The receipt of currency or certain monetary instruments in amounts exceeding $5,000 from outside the United States, by a person within the United States must be reported within thirty days after such receipt (Regulations Sections 103.23(b) and 103.25(c)).

D. Reports of Interest in Foreign Financial Accounts By Persons

A person subject to the jurisdiction of the United States who is required to file a federal income tax return must indicate on the tax form whether or not he has any interest in foreign financial accounts. If he does, a short form giving information about such accounts must be filed. Records of such accounts are to be retained for five years and shall be available for inspection as authorized by law (Regulations Sections 103.24 and 103.32).

E. Recordkeeping By Financial Institutions Financial institutions are required to retain for five years either the original or a copy of:

(1) records of extensions of credit exceeding $5,000,
except those secured by real property;

(2) records of each advice, request or instruction
received regarding a transaction resulting in the
transfer of more than $10,000 to a person, ac-
count, or place outside the United States;
(3) records of each advice, request or instruction
given to another financial institution or other
person located within or without the United

States, regarding a transaction intended to result in the transfer of more than $10,000 to a person, account or place outside the United States. (Regulations Section 103.36(c))

F. Additional Recordkeeping By Banks

Banks are required to obtain and keep a record of the taxpayer identification number or social security number of United States citizens or persons residing or doing business in the United States who open deposit or share accounts after June 30, 1972 (Regulations Section 103.34(a)).

Banks must retain for five years, unless otherwise noted, either the original or a copy of:

(1) each document granting signature authority over each deposit or share account;

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(2) each statement, ledger card or other record on each deposit or share account, showing each transaction in, or with respect to, that account;

(3) each check, clean draft, or money order drawn on the bank or issued and payable by it, with some exceptions as stated in Section 103.34 (b) (3);

(4) each item other than bank charges which results in a debit to a customer's deposit or share account;

(5) each item of more than $10,000 remitted or transferred to a person, account or place outside the United States;

(6) a record of each remittance or transfer of more than $10,000 to a person, account or place outside the United States;

(7) each check or draft over $10,000 drawn on or issued by a foreign bank or otherwise acquired by the bank;

(8) each item of more than $10,000 received directly (not through a domestic financial institution) from outside the United States; (9) a record of each receipt of more than $10,000 received at any one time directly (not through a domestic financial institution) from outside the United States; and

(10) records needed to reconstruct a checking account and to trace such checks or to supply a description of a deposited check. These records are to be kept for two years pursuant to Regulations Section 103.36(c). (Regulations Sections 103.34(b) and 103.36(c))

G. Additional Recordkeeping By Securities Brokers and Dealers

Brokers and dealers are required to obtain and keep a record of the taxpayer identification number or social security number of United States citizens, or persons residing or doing business in the United States for each brokerage account opened after June 30, 1972 (Regulations Section 103.35(a)).

Brokers and dealers are required to retain for five years either the original or a copy of:

(1) documents granting signature or trading authority over accounts;

(2) records described in Title 17, Code of Federal Regulations;

(3) a record of each transfer of more than $10,000 outside the United States; and

(4) a record of each receipt of currency, etc. of more than $10,000 received on any one occasion directly (not through a domestic financial institution) from outside the United States. (Regulations Sections 103.35(b) and 103.36(c))

H. Variations From Regulations

The Secretary of the Treasury may make exceptions, grant exemptions or impose additional requirements (Regulations Section 103.45).

I. Civil and Criminal Penalties

The Act provides for three kinds of civil penalties: (1) a penalty of up to $1,000 for violation of any section,

(2) a penalty of up to the value of the item transported for failure to make reports under Section 103.23, and

(3) forfeiture of the transported item which was not reported. (Regulations Section 103.47 and 103.48)

The Act also contains a graduated structure of criminal penalties:

(1) a fine of up to $1,000 and/or imprisonment for not more than one year for violation of any section,

(2) a fine of up to $10,000 or imprisonment of not more than five years or both if the violation is committed in connection with the violation of a Federal law punishable by imprisonment for more than one year,

(3) false statements or representations in reports also may be punishable by fines of not more than $10,000 and/or imprisonment of not more than five years, and

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II. CURRENCY AND FOREIGN TRANSACTIONS REPORTING ACT STATUTE (Titles I, II and IV of Public Law 91–508)

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12 USC 1811

note.

81 Stat. 610.
12 USC 1830,
1831.

The Federal Deposit Insurance Act is amended (1) by redesignating 64 Stat. 873. sections 21 and 22 as 22 and 23, respectively, and (2) by inserting the following new section immediately after section 20: "SEC. 21. (a) (1) The Congress finds that adequate records maintained by insured banks have a high degree of usefulness in criminal, tax, and regulatory investigations and proceedings. The Congress further finds that microfilm or other reproductions and other records made by banks of checks, as well as records kept by banks of the identity of persons maintaining or authorized to act with respect to accounts therein, have been of particular value in this respect "(2) It is the purpose of this section to require the maintenance of 84 STAT. 1115 appropriate types of records by insured banks in the United States where such records have a high degree of usefulness in criminal, tax, or regulatory investigations or proceedings.

"(b) Where the Secretary of the Treasury (referred to in this section as the 'Secretary') determines that the maintenance of appropriate types of records and other evidence by insured banks has a high degree of usefulness in criminal, tax, or regulatory investigations or proceedings, he shall prescribe regulations to carry out the purposes of this section.

"(c) Each insured bank shall maintain such records and other evidence, in such form as the Secretary shall require, of the identity of each person having an account in the United States with the bank and of each individual authorized to sign checks, make withdrawals, or otherwise act with respect to any such account. The Secretary may make such exemptions from any requirement otherwise imposed under this subsection as are consistent with the purposes of this section. "(d) Each insured bank shall make, to the extent that the regulations of the Secretary so require

"(1) a microfilm or other reproduction of each check, draft, or similar instrument drawn on it and presented to it for payment; and

"(2) a record of each check, draft, or similar instrument received by it for deposit or collection, together with an identification of the party for whose account it is to be deposited or collected, unless the bank has already made a record of the party's identity pursuant to subsection (c).

"(e) Whenever any individual engages (whether as principal, agent, or bailee) in any transaction with an insured bank which is required

84 STAT. 1114

Post, p. 1118.

Report to
Congress.

84 STAT. 1115 84 STAT. 1116

48 Stat. 1255; 81 Stat. 611. 12 USC 172417300.

Ante, p. 1114.

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to be reported or recorded under the Currency and Foreign Transactions Reporting Act, the bank shall require and retain such evidence of the identity of that individual as the Secretary may prescribe as appropriate under the circumstances.

(f) In addition to or in lieu of the records and evidence otherwise referred to in this section, each insured bank shall maintain such records and evidence as the Secretary may prescribe to carry out the purposes s of this section.

"(g) Any type of record or evidence required under this section shall be retained for such period as the Secretary may prescribe for the type in question. Any period so prescribed shall not exceed six years unless the Secretary determines, having regard for the purposes of this section, that a longer period is necessary in the case of a particular type of record or evidence.

"(h) The Secretary shall include in his annual report to the Congress information on his implementation of the authority conferred by this section and any similar authority with respect to recordkeeping or reporting requirements conferred by other provisions of law." § 102. Retention of records by insured institutions

Title IV of the National Housing Act is amended by adding at the end thereof the following new section:

"SEC. 411. The Secretary of the Treasury shall prescribe such regulations as may be appropriate to carry out, with respect to insured institutions, the purposes set forth in section 21 of the Federal Deposit Insurance Act with respect to insured banks."

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128. Compliance.

129. Administrative procedure.

8121. Congressional findings and purpose

(a) The Congress finds that certain records maintained by businesses engaged in the functions described in section 123(b) of this Act have a high degree of usefulness in criminal, tax, and regulatory investigations and proceedings. The Congress further finds that the power to require reports of changes in the ownership, control, and managements of types of financial institutions referred to in section 122 of this Act may be necessary for the same purpose.

(b) It is the purpose of this chapter to require the maintenance of appropriate types of records and the making of appropriate reports by such businesses in the United States where such records or reports have a high degree of usefulness in criminal, tax, or regulatory investigations or proceedings.

§ 122. Authority of Secretary with respect to reports on ownership and control

Where the Secretary determines that the making of appropriate reports by uninsured banks or uninsured institutions of any type with respect to their ownership, control, and managements and any changes therein has a high degree of usefulness in criminal, tax, or regulatory investigations or proceedings, he may by regulation require such banks or institutions to make such reports as he determines in respect of such ownership, control, and managements and changes therein.

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§ 123. Authority of Secretary with respect to recordkeeping and procedures

(a) Where the Secretary determines that the maintenance of appropriate records and procedures by any uninsured bank or uninsured institution, or any person engaging in the business of carrying on in the United States any of the functions referred to in subsection (b) of this section, has a high degree of usefulness in criminal, tax, or regulatory investigations or proceedings, he may by regulation require such bank, institution, or person

84 STAT. 1116

(1) to require, retain, or maintain, with respect to its func- 84 STAT. 1117 tions as an uninsured bank or uninsured institution or its func

tions referred to in subsection (b), any records or evidence of any type which the Secretary is authorized under section 21 of the

Federal Deposit Insurance Act to require insured banks to require, Ante, p. 1114. retain, or maintain; and

(2) to maintain procedures to assure compliance with requirements imposed under this chapter. For the purposes of any civil or criminal penalty, a separate violation of any requirement under this paragraph occurs with respect to each day and each separate office, branch, or place of business in which the violation

occurs or continues.

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Whenever it appears to the Secretary that any person has engaged, is engaged, or is about to engage in any acts or practices constituting a violation of any regulation under this chapter, he may in his discretion bring an action, in the proper district court of the United States or the proper United States court of any territory or other place subject to the jurisdiction of the United States, to enjoin such acts or practices, and upon a proper showing a permanent or temporary injunction or restraining order shall be granted without bond. Upon application of the Secretary, any such court may also issue mandatory injunctions commanding any person to comply with any regulation of the Secretary under this chapter.

125. Civil penalties

(a) For each willful violation of any regulation under this chapter, the Secretary may assess upon any person to which the regulation applies, and, if such person is a partnership, corporation, or other entity, upon any partner, director, officer, or employee thereof who willfully participates in the violation, a civil penalty not exceeding $1,000.

(b) In the event of the failure of any person to pay any penalty asse sed under this section, a civil action for the recovery thereof may, in the discretion of the Secretary, be brought in the name of the United States.

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