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From Banking and Finance Law Daily, September 25, 2014

FinCEN clarifies regulatory requirements for currency transporters

By Lisa M. Goolik, J.D.

The Financial Crimes Enforcement Network has issued an administrative ruling to clarify the circumstances under currency transporters, including armored car services, must register with FinCEN as money transmitters and comply with Bank Secrecy Act/Anti-Money Laundering (BSA/AML) regulations. Under the ruling, currency transporters who engage in transactions that are not covered by an exemption from money transmission, as provided in the ruling, have the same regulatory obligations as other money transmitters (FIN-2014-R010, Sept. 24, 2014).

Currency transporters. For purposes of the ruling, “currency transporter” means any person that physically transports currency, other monetary instruments, other commercial paper, or other value that substitutes for currency, as a person primarily engaged in such business, such as armored car services and some types of cash couriers.

Exemptions. The ruling provides that when a Federal Reserve Bank or a federally-regulated financial institution contracts for and directs the physical transportation of value by the currency transporter, the currency transporter is exempted from money transmitter status under FinCEN’s regulations exclusively with respect to the physical transportation of value. When a federally regulated financial institution is acting as shipper, FinCEN will consider the transportation to be a part of the financial institution’s activities, and the financial institution is primarily responsible for BSA/AML compliance with respect to the transportation.

In addition, where a currency transporter, without the intervention of any third party such as a subcontractor or transshipper, picks up value from a person (or from a shipper acting at the direction of that person) and physically delivers the same value to the same person at another location, or to an account of that person at a BSA-regulated financial institution, that activity alone will not result in the currency transporter being a money transmitter under FinCEN’s regulations. To qualify for the exemption, the currency transporter must obtain information from the shipper confirming that the final beneficiary is not someone other than the shipper in order to determine whether the exemption applies. Ignorance will not excuse the currency transporter’s regulatory obligations.

In all other scenarios, the currency transporter will be deemed a money transmitter subject to FinCEN’s BSA/AML regulations.

BSA obligations. If a transaction is not covered by an exemption or exception, a currency transporter must comply with the rules for money transmitters. The currency transporter must register with FinCEN as a money transmitter; assess the money laundering risk involved in its non-exempt, non-excepted transactions; and implement an anti-money laundering program to mitigate such risk. In addition, the currency transporter must comply with required recordkeeping, reporting, and transaction monitoring for each individual shipment not covered by exemption or exception.

Those regulatory requirements include the filing of Currency Transaction Reports and Suspicious Activity Reports, general recordkeeping maintenance, recordkeeping related to the sale of negotiable instruments, and compliance with the Funds Transfer and Travel rules, with respect to those transactions that fit the definition of “transmittal of funds.”

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