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FinCEN’s Proposed Changes to the Recordkeeping and Travel Rule Thresholds

Does the benefit to law enforcement outweigh the increased cost to regulated entities.

FinCEN has proposed lowering the “Recordkeeping Rule” and “Travel Rule” thresholds, and although the changes would benefit law enforcement, they could also result in increased cost to regulated entities. BDO’s Chuck Pine discusses the potential compliance burden the proposed changes could pose.

On October 27, 2020, the U.S. Department of the Treasury Financial Crimes Enforcement Network (FinCEN) and the Board of Governors of the Federal Reserve System (Board) (collectively known as the Agencies) issued a joint advanced notice of proposed rulemaking (ANPRM) to lower the thresholds under the Recordkeeping Rule and the Travel Rule to $250 for fund transfers and transmittals of funds that begin or end outside the United States. Written comments to the ANPRM were due on or before November 27, 2020.

While these proposed changes are intended to help law enforcement address financial crimes , they could also potentially create a compliance burden on financial institutions that process international payments. However, financial institutions that make proactive preparations for the changes ahead can help minimize that burden and ensure the successful implementation of new processes and procedures.

The Recordkeeping Rule and Travel Rule

On January 3, 1995, the Agencies jointly issued a recordkeeping rule (the “Recordkeeping Rule”) that requires banks and nonbank financial institutions (NBFIs) to collect and retain information related to funds transfers and transmittals of funds in amounts of $3,000 or more, codified at 31 CFR 1020.410(a) and 1010.410(e). As stated by the Agencies, the Recordkeeping Rule is intended to help law enforcement and regulatory authorities detect, investigate and prosecute money laundering and other financial crimes by preserving an information trail about persons sending and receiving funds through the funds transfer system.

At the same time, FinCEN issued a separate rule — the “Travel Rule” — that requires banks and NBFIs to transmit information on certain funds transfers and transmittals of funds to other banks or NBFIs participating in the transfer or transmittal, codified at 31 CFR 1010.410(f). The Travel Rule and the Recordkeeping Rule complement each other: The Recordkeeping Rule requires banks to collect and retain the information that, under the Travel Rule, must be included with transmittal orders.

The information required to be collected and retained includes, at a minimum:

• Name and address of the originator/transmitter,
• Amount of the payment,
• Date of the payment,
• Any payment instructions received from the originator and
• Identity of the beneficiary’s financial institution.

Moreover, if received, the originating institution must retain and transmit:

• The beneficiary’s name and address,
• The beneficiary’s account number and
• Any other information identifying the beneficiary.

Proposed Changes

The proposed modification would reduce the threshold from $3,000 to $250 for funds transfers and transmittals of funds that begin or end outside the United States . A funds transfer or transmittal of funds would be considered to begin or end outside the United States if the bank or NBFI knows or has reason to know that the originator, originator’s financial institution, beneficiary or beneficiary’s financial institution is located in, is ordinarily resident in or is organized under the laws of a jurisdiction other than the United States. Of note, the rule would remain unchanged for domestic funds transfers.

The Agencies are also proposing to expand the definition of “money” to include convertible virtual currency (CVC). Currently, the Recordkeeping Rule does not define the term “money,” but references the definition set forth in the Uniform Commercial Code (UCC). The UCC defines “money” as “a medium of exchange currently authorized or adopted by a domestic or foreign government” [see U.C.C. 1-201(b)(24) (2001)]. Some have argued that because CVCs are not authorized or adopted by any government, they cannot be defined as “money.”

Rationale for Proposed Changes

Threshold Lowering for Cross-Border Transfers

In proposing these modifications, the Agencies considered the usefulness of transaction information associated with smaller-value cross-border transfers and transmittals of funds in criminal, tax or regulatory investigations or proceedings.

Specifically, the Agencies reviewed nearly 2,000 Suspicious Activity Reports (SARs) filed by money transmitters, which indicate that a substantial volume of potentially illicit funds transfers and transmittals of funds occur below the $3,000 threshold. The Agencies also studied recent prosecutions showing that individuals were sending and receiving funds to finance terrorist activity in amounts below (and in some cases, well below) the current $3,000 recordkeeping threshold.

FinCEN found that 99 percent of the underlying transactions reported in the reviewed SARs began or ended outside of the United States. As a result of these observations, FinCEN and the Board suggest lowering the cross-border threshold to $250. Because the underlying reported transactions in the reviewed SARs were predominantly not domestic in nature, FinCEN recommends maintaining the threshold for domestic transactions at $3,000.

Moreover, the proposed lowered threshold for the Recordkeeping and Travel Rules has garnered support from law enforcement, including the Money Laundering and Asset Recovery Section (MLARS) of the Criminal Division of the Department of Justice (DOJ).

Finally, the Agencies noted that the Financial Action Task Force (FATF) has indicated that records of smaller-value transactions are valuable to law enforcement, particularly with respect to terrorist financing investigations. The European Union and many jurisdictions around the world have adopted a 1,000 USD/EUR de minimis cross-border threshold specified in the FATF Recommendations.

Definition of “Money” to Include Virtual Currencies

As the Agencies note, since the issuance of the Recordkeeping Rule and the Travel Rule , a number of CVCs (such as Bitcoin and Ethereum) have been created, and public use of CVCs has grown significantly in recent years. The expanded public use also includes bad actors, who have used CVCs for purposes of international terrorist financing, weapons proliferation, sanctions evasion, money laundering, in addition to predicated crimes like narcotics trafficking. Explicitly including CVCs within the definition of “money” eliminates any ambiguity as to whether virtual currencies come within the purview of the Recordkeeping and Travel Rules.

The inclusion of CVCs within the definition of “money” aligns with recommendations from FATF, which has advised to consider virtual assets as “property” or “funds,” and consequently, should apply relevant FATF anti-money laundering/counter-terrorist-financing measures to virtual assets.

In furtherance of the proposed changes, the Agencies also note that “[i]n addition to CVCs, foreign governments — including Iran, Venezuela and Russia — have created or expressed interest in creating digital currencies that could be used to engage in sanctions evasion” (ANPRM).

Potential Burden on Financial Institutions and Other Entities

The Agencies believe that the effect of lowering the $3,000 threshold on banks and NBFIs is likely to be low, stating that some banks are already collecting information on at least a portion of transactions taking place under the current threshold for purposes of reporting suspicious transactions to FinCEN.

Notwithstanding the Agency’s statements, the proposed rule change will likely increase the cost of compliance for banks, NBFIs and other regulated entities. For one, as noted by FinCEN, banks and NBFIs are collecting information on some transactions (those over $3,000), but not all. The lowering of the thresholds will necessarily mandate, at a minimum, the updating of procedures and processes already in place, additional training and increased recordkeeping costs.

Moreover, unlike banks and NBFIs, most virtual currency businesses are not equipped with the tools to collect and retain information required by the Recordkeeping and Travel Rules. Some argue that the burden on these types of businesses is higher, because the information required under the Rules is far more information that is generally required to transfer an amount of virtual currency between two parties. Moreover, banks and NBFIs already have required customer information programs (CIP) in place to identify and verify the identity of their customers, while virtual currency businesses do not.

In light of these proposed new obligations, it is important for businesses to get ahead and prepare for the coming changes and to avoid future compliance challenges by considering:

• Implementing processes and procedures to capture funds transfers and transmittals of funds at $250 or more that begin or end outside the United States, keeping in mind to include specifics as to how to determine whether a transaction is, in fact, cross-border in nature.
• In light of new processes and procedures, ensuring that employees tasked with capturing and retaining the information required under the Rules receive updated training on the proposed changes.
• Ensuring sufficient funding for the compliance department and BSA Officer.
• Installing robust internal controls and quality review processes in line with the new regulatory guidance and best practices.

With these enhancement opportunities, banks and other entities can stay ahead of the curve to ensure successful implementation of processes and procedures to capture and retain information required under the amended Recordkeeping and Travel Rules.

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How to adopt FinCEN’s proposed recordkeeping, travel rules

Tags: Financial Institutions

Are you ready for FinCEN’s proposal to amend the recordkeeping and travel rules under the Bank Secrecy Act? 

On October 27, 2020, in the midst of all the COVID-19 chaos, FinCEN and the Board of Governors of the Federal Reserve System issued a joint advance notice of proposed rulemaking (ANPRM) to lower the thresholds under the Recordkeeping Rule and the Travel Rule from $3,000 for funds transfers and transmittals of funds that begin or end outside the United States down to $250. Written comments on the proposed change were due on November 27, 2020.

While the proposed changes are undoubtedly intended to help law enforcement identify and address financial crimes, there is also a potential compliance burden for financial institutions that process international transfers.

Here are proposed changes and what you can do now to ensure a successful transition to any new requirements.

The current rule

On January 3, 1995, the agencies jointly issued the recordkeeping rule, which requires banks and nonbank financial institutions (NBFIs) to collect and retain information related to funds transfers and transmittals of funds in amounts of $3,000 or more. At the same time, FinCEN issued a separate rule, the travel rule, which requires banks and NBFIs to transmit information on certain funds transfers and transmittals of funds to other banks or NBFIs participating in the transfer or transmittal. The Travel Rule and the Recordkeeping Rule complement each other: The recordkeeping rule requires banks to collect and retain the information that, under the Travel Rule, must be included with transmittal orders.

The proposed rule

The proposed modification would reduce the recordkeeping threshold from $3,000 to $250 for funds transfers and transmittals of funds that begin or end outside the United States. A funds transfer or transmittal of funds would be considered to begin or end outside the United States if the bank or NBFI knows or has reason to know that the originator, originator’s financial institution, beneficiary or beneficiary’s financial institution is located in, is ordinarily resident in or is organized under the laws of a jurisdiction other than the United States. The rule would remain unchanged for domestic funds transfers.

The agencies are also proposing to expand the definition of money to include convertible virtual currency (CVC). Currently, the recordkeeping rule does not define the term money but references the definition set forth in the Uniform Commercial Code (UCC). The UCC defines money as “a medium of exchange currently authorized or adopted by a domestic or foreign government.” While this change may or may not affect your organization, it is something to keep in mind if you are already offering or are considering offering services related to virtual currency.

Potential impact and preparation

The agencies have stated that the burden of lowering the $3,000 threshold on financial institutions is low, stating some financial institutions are already collecting information on at least some of the information on some of those transactions already.

However, there are a few things you and your team can start thinking about to better position yourselves for any changes that may come down the road:

• Consider what procedures will be needed to capture funds transfers and transmittals of funds at $250 or more that begin or end outside the United States, keeping in mind how you will determine whether a transaction is, in fact, cross-border in nature. If you use an automated surveillance monitoring system, consider what reporting capabilities are already available to help capture this information.
• In light of new processes and procedures, plan for how employees tasked with capturing and retaining the information required under the Recordkeeping and Travel Rules receive updated training on the proposed changes.
• Ensure sufficient resources, such as appropriate staffing levels, are available for the compliance department and BSA officer to implement the new rules.
• Consider the changes to internal controls and quality review processes that are necessary to be in line with the new regulatory guidance and best practices.

How Wipfli can help

Taking the time now to review the full ANPRM and working to get ahead of the curve will ensure successful implementation of procedures that are compliant with the new rules. Our team knows how to help you navigate FinCEN rules while saying in compliance. To learn more, visit our  web page  or learn more from our team with these resources:

• How you can help with BSA/AML and COVID-19-related fraud (podcast)
• Bank Secrecy Act and COVID-19 fraud
• Updates to FFIEC BSA/AML manual
• Is your BSA/AML training program adequate?

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The State of Financial Crime 2024: Download our latest research

13 January 2020

Fatf travel rule.

Insights FATF Travel Rule

The FATF Travel Rule is an update to the existing FATF Recommendation 16 , which concerns cross-border and domestic wire transfers. The update is intended to address the AML/CFT challenges associated with the increasing global use of cryptocurrency and to help law enforcement agencies better track criminals who use crypto laundering . The Travel Rule’s regulatory focus means that it will have specific implications for virtual asset service providers (VASPs), such as cryptocurrency exchanges and cryptocurrency wallet providers. 

Officially adopted by the FATF on June 21, 2019 , the progress that member-states have made in implementing the Travel Rule will be reviewed during the FATF plenary session in June 2020 as well as whether the guidance has remained fit for purpose given the speed with which the technology is moving. Given its far-reaching regulatory scope, all VASPs and other obligated entities should be familiar with the Travel Rule and the AML/CFT compliance obligations that it entails.

What is the FATF Travel Rule?

Under Recommendation 16’s Travel Rule, the originators and beneficiaries of all transfers of digital funds must exchange identifying information. The rule will apply to all VASPs, financial institutions and obliged entities. Additionally, the originators and beneficiaries involved in a transfer must be able to guarantee the accuracy of the information they send to the other.

Prior to the introduction of the FATF Travel Rule, companies that conducted wire transfers of conventional funds already had to issue a range of reciprocal information. The new rule essentially extends that obligation to cryptocurrency transfers. In principle, the Travel Rule is similar to a number of existing global audit regulations: the United States’ Bank Secrecy Act , for example, requires an exchange of information for funds of a value equal or greater than $3,000.

What information does the Travel Rule require?

As part of FATF Recommendation 16, originators of virtual asset transfers must submit the following information to beneficiaries:

• Originator name
• Account number (where this is being used to process the transaction)
• Physical address
• National identity number, customer identification number or other unique identity number
• Date of birth and place of birth

Beneficiaries must submit the following information to originators:

• Beneficiary name
• Account number or virtual wallet number (where this is necessary to process the transaction)

How will the Travel Rule benefit AML/CFT efforts?

The rapid growth of cryptocurrency usage has led to regulatory inconsistency in jurisdictions across the world and has created opportunities for money launderers and terrorists to commit financial crimes using virtual assets. The anonymity of blockchain technology is particularly useful for money launderers: while the originator of cryptocurrency transfers provides verified information (name, address, etc.), the beneficiary is able to remain anonymous.

The FATF Travel Rule will help AML/CFT efforts by enhancing the audit trail when virtual assets are transferred between entities such as exchanges and wallets. The new information collection rules will mean that financial authorities are better able to detect and prevent money laundering activities involving cryptocurrency and will also help deter criminals by reducing the number of VASPs through which they can move funds.  

What are the challenges to implementing the Travel Rule?

Information sharing is at the heart of the FATF Travel Rule, but given the relative lack of regulation in the cryptocurrency industry, it represents a significant compliance obligation for many VASPs. 

The lack of identifying ownership information necessary to facilitate cryptocurrency transfers means that VASPs and financial institutions must develop AML solutions that allow them to share the necessary data and that comply with existing privacy laws, such as the EU’s General Data Protection Regulation and California’s Consumer Privacy Act .

In addition to fulfilling those regulatory obligations, VASPs must consider the costs and administrative effort that their FATF Travel Rule solutions will involve and find a way to keep cryptocurrency transactions efficient and cost-effective for customers. 

How can firms comply with the FATF Travel Rule?

An ideal Travel Rule solution should satisfy regulatory obligations without disrupting customer service needs. Accordingly, the FATF has suggested a range of characteristics that a Travel Rule solution should feature to meet the objectives of Recommendation 16:

• The solution should minimize both regulatory impact and barriers to adoption and be easy to integrate with an existing AML/CFT program.
• It should be affordable and open source (or non-profit) in order to be accessible for smaller VASPs and innovative start-ups. 
• It should contribute to a global regulatory standard of virtual asset transfers. 
• It should be flexible enough to accommodate future innovations and advances in technology.
• It should complement the efforts of law enforcement agencies to prosecute money launderers and terrorists by proactively detecting suspicious activities.
• It should be scalable and maintainable and be able to gain widespread industry support.

While the FATF Travel Rule is technologically neutral, it suggests a number of approaches that may help VASPs implement a Travel Rule solution by leveraging existing technology and infrastructure . These include:

• Public and private keys: Created in pairs for each entity involved in a digital transmission, keys encrypt and decrypt information only for originators and beneficiaries.
• Transport layer security/secure sockets layers: TLS and SSL connections also make use of public and private keys to secure transmissions made over the internet. 
• X.509 certification: Digital certificates administered by authorities using the X.509 PKI standard. X.509 certificates (and attribute certificates) further reinforce the veracity of public keys and are used worldwide in the public and private sectors. 
• API technology: Providing routines and protocols for software applications and specifying how different applications should interact with each other. 

FATF organizations and authorities in FATF member states are considering implementation approaches to Recommendation 16, including establishing a centralized, global database that would collect information on every VASP worldwide and their customers . 

Under this proposal, VASPs would register in their home countries to receive a unique identification code (similar to a bank SWIFT code). The unique code attached to each VASP would then be uploaded to the global database that would connect all VASPs operating under the Recommendation 16 FATF Travel Rule. Accordingly, during subsequent digital asset transfers, VASPs would use their respective identifier codes to verify the information they are exchanging in compliance with the Travel Rule.

A Guide to AML for Crypto Firms

Build a best practice AML program for your crypto firm and stay ahead of the latest regulatory trends with this guide.

Originally published 13 January 2020, updated 16 January 2023

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Disclaimer: This is for general information only. The information presented does not constitute legal advice. ComplyAdvantage accepts no responsibility for any information contained herein and disclaims and excludes any liability in respect of the contents or for action taken based on this information.

Copyright © 2024 IVXS UK Limited (trading as ComplyAdvantage).

FinCEN Travel Rule Requirements

• February 23, 2021
• AML Compliance , Banks , FinTechs , MSBs , Webinars

The FinCEN “Travel Rule” has many requirements and nuances that can challenge and confuse new and seasoned AML compliance professionals alike. From the basics of what types of transactions fall under the Rule, to mandatory versus optional data requirements, to all the various exceptions – plus the many nuances addressed by subsequent guidance not contained in the Rule itself – compliance professionals need to understand the details of this longstanding BSA regulation .

In this webinar, you will:

• Understand the fundamental requirements and underlying purpose of the FinCEN Travel Rule
• Understand the definition of a funds transfer, and what types of transactions are and are not considered funds transfers for Travel Rule purposes
• Understand the circumstances where the Travel Rule does not apply
• Be aware of the proposed changes to the Travel Rule per the October 2020 NPR, including new requirements for crypto-currency/digital asset transfers
• Understand how the wire transfer data requirements of the FRB’s Fedwire system differs from those of the Travel Rule
• Learn how to comply with the Travel Rule in special situations, including aggregated transfers, transfers for non-customers, and various originator name issues

Q&A On FinCEN Travel Rule Requirements

Q: In a lending situation, where a borrower requests a drawdown on their loan through new wire instructions and asked that the funds be sent to them at a third-party bank, and the lending bank sends those funds from their general ledger account. Who do you think should be listed as the originator on the wire disbursing those funds?

A: I think that the customer should be, the borrower. Because regardless of where you are taking the funds out of, it is that customer who originated the payment order themselves. So, yes, it should be the borrower as the originator.

Q: What are the travel rule requirements when the originator and originator’s bank are one and the same? So, for example, foreign exchange settlements between financial institutions?

A: Okay, so this gets a little confusing. But, yes, on a funds transfer, the originator can be the bank and the originator’s financial institution is also the bank. So, for instance, we did that all the time at my institution because, for example, we were making settlements on, say, syndicated loans or participated loans where we were sending funds to another bank for their share of interest on a loan they were participating in with us. And same thing with foreign exchange types of things. The bank is the originator, because they’re the ones who created the payment order, and they are their own bank. So they are listed as the originator’s bank. Good point.

Q: Is a U.S. branch of a foreign bank considered to meet the definition for a cross-border transaction?” For example, if a bank sends a wire from their New York branch of HSBC to your account at the New York branch of Standard Chartered, is that cross-border?

A: That’s a good question, and that’s part of what the confusion over this proposed rule comes about. So, in that case, both of the financial institutions would be considered U.S. financial institutions. But I would think, and again, this is just my interpretation, is that you would need to look at the originator and the beneficiary. So if the originator is located in a foreign country, that may then be considered a cross-border transaction. But again, it’s very vague. So questions just like this one are going to come up pretty frequently, and hopefully may be addressed in the final rule. Or what’s going to happen, like what happens all the time, is that then FinCEN has to issue interpretive guidance to explain what they meant when all of these interesting scenarios come up.

Q: How do you comply with the travel rule as a correspondent bank with no Fed access, with incoming wires, when the sending bank usually does not send full information?

A: So as the receiving bank, whether you’re acting as an intermediary/correspondent, or if you’re the ultimate beneficiary’s bank, you have only the requirement to keep what you get. So you are in compliance if you keep a record of what you received from that originating bank regardless of the lack of information that may have not been included on the transfer. Now something that sort of tangentially may occur is that that may ultimately wind up being suspicious activity depending on what the nature of the transfer is. But keeping in mind that transfers between banks don’t have to follow the travel rule. So, again, it all depends on the nature of the transaction. But, for travel or compliance purposes as a receiving bank, your job is to keep a record of what you get.

Q: Do you have the case where people are trying to be elusive or changed the beneficiary name?

A: Well, the beneficiary name is really, that’s…the originator has to provide that. We can’t confirm that. We can’t validate it. It’s information that they provide. Some institutions do that on the receiving end, but from the originator’s bank’s perspective, no, there is no way you could validate that.

But I have experienced in the past certain foreign banks, and actually one of the big ones, it was actually a fraud situation, was a social engineering fraud against our customer where the fraudster had given instructions to this customer to send a wire transfer to a bank in China to a particular beneficiary. And the Chinese bank returned that wire to us, fortunately, because the account name did not match up with the account number. And so that actually saved our customer about $600,000 which was a small miracle. So, on the receiving end, banks may do that, but on the originating side, you wouldn’t have any way to validate that information.

Q: Our online banking software passes originator information to our wire system from the core. For our internal accounts that the originator wires through online banking, the wire is sometimes on behalf of a customer, not the bank. So due to the way the systems are integrated, the bank’s info is passed to the wire system as the originator. Are we complying with the travel rule if we enter the true originator’s name, address, and truncated account number in the beneficiary message field, or does the information have to go into the specific originator and account number fields?

A: It’s a long question, but I think I know what this person may be getting at. So if the bank… Here’s an example that I’ll give that was very frequent at my institution. Because we were a lender and did a lot of syndicated loans or participation loans where other banks were sharing in that loan. Yeah, we were the administrator or the agent bank in these deals. So the customer itself was the borrower, and if that customer, for example, requested an advance off of the loan, then that wire transfer would reflect the customer as the originator.

But there were many times when, on this syndicated or shared loan, as the agent bank, it was our job to give all the other banks that were a part of this loan their share of things. So like their share of interest payments or principal payments made by the customer, or if the customer didn’t advance on their loan, then we needed to receive money from the other participating banks to reimburse us for the entire amount of the funds transfer made by the customer.

So those transfers where my bank was remitting funds to another bank with respect to this particular customer’s loan, then, yes, we, as that bank, would indicate it ourselves as the originator as well as the originator’s bank. And then the beneficiary was the receiving bank, the other participating banks. That’s where I’m thinking this is kind of where this person may be coming from. That’s my best answer at this point without having more information.

Q: So if there’s no travel police to police the rule, they just want to get confirmation, I mean, you still have to follow the rule because you have internal and external auditors requesting to see this information. Is this correct?”

A: Like I said, there’s no travel rule police verifying that you are following the travel rule, and the recipient banks, it’s not their job to come back and tell you, “Hey, you left this off.” But where it’s going to show up later is if you’re asked for this information by law enforcement or a regulator, and you can’t provide it, then that’s going to get you in trouble. So it kind of comes in on the backend if somebody actually asks for that information.

Q: Does a Bitcoin Operator need to follow the travel rule, and if yes, what should be the upper threshold if over 3,000?”

A: There is no upper threshold. I can tell you that right off the bat. And here’s my knowledge of this is that there are various nuances to different types of what FATF calls virtual asset service providers in the cryptocurrency world. And if whoever they are, based on their operations, they meet the definition of a money service business, then in turn, they must comply with the Bank Secrecy Act like any other money service business which means they must also comply with the travel rule.

Now where they have pushed back over the years is specifically in this, around this definition of money. So the travel rule says, “Well, it applies to transfers of money.” Well, the virtual currency world said, “Well, crypto isn’t defined as money so, therefore, it doesn’t apply to us.” Well, now this NPRM is now putting that to rest and saying, “Yes, cryptocurrency is now money so, therefore, there’s no question that transmittals of this are then subject to the travel rule.”

Q: Could you give an example of a transaction involving CVC, a Convertible Virtual Currency that would require recordkeeping and travel rule under this NPRM?

A: Any transmittal of funds from one person or entity to another, to a recipient someplace else, that which is probably at another currency exchange or even within accounts in that currency exchange would need to comply.

Q: Do most banks return wires if the beneficiary information is not provided?

A: It depends on the practice of the bank. I know at my bank if we received a wire transfer that didn’t have clear beneficiary information, we would bend over backwards to try to figure out who this was meant for. And that would include through Fedwire. You can send something called the service message back to the sending bank and say, “Hey, we need more information in order to post this wire.” But there…I guess, it really does depend on the practices of that bank. It’s a policy decision.

If there’s no beneficiary information or if the account number that’s provided doesn’t match up with any of your records, then you may decide to just return it. That’s purely an option based on the bank. One example that I did give that was kind of interesting in our last presentation was that some banks will return a wire if the name on the wire as the beneficiary doesn’t match up with the name on the account that’s also on the wire transfer. They may reject it. And we had a customer who was a victim of a social engineering fraud and had sent a wire transfer to China. And the fraudsters had given them bad information so the name they were told to put on as the beneficiary didn’t match up with the account number they were told to put on the wire. And so the Chinese bank returned it to us.

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Travel Rule: Explained

Etana Custody Maintains Regulatory Standards

Last month, two regulatory agencies, The Financial Crimes Enforcement Network (FinCEN) and the Federal Reserve System proposed to modify a longstanding rule requiring financial institutions to release client information for international transactions worth at least $3,000; known as the Travel Rule since 1995.

The agencies have proposed to lower that threshold to $250. FinCEN published the following statement explaining the reason for the proposal:

“FinCEN’s analysis of 2,000 suspicious transactions reports (SARS) filed between 2016 and 2019, the mean and medium dollar value was $509 and $255, respectively. Almost all the transactions began or ended outside the US.” ( U.S.: FinCEN )

In traditional markets, banks, broker-dealers, and other financial institutions are required to track the names, addresses, and account numbers of the originator (sender of funds) and the beneficiary (receiver of funds). Financial regulations like the Travel Rule maintain security and safeguard clients’ and investors’ digital assets. Reducing the Travel Rule’s threshold to $250, would provide greater information to run analytics, find the risks associated with suspicious transactions, and help prevent cybercriminal activities. The current conversation in the marketplace is focused on the security of private information held by financial institutions as well as the idea that crypto should remain decentralized and unregulated. Companies doing business in the crypto markets will have to invest time and money into developing technical solutions and processes that are scalable in order to comply with the Travel Rule proposal. Certain companies looking to comply with the FinCEN rule may find working with a custodian of benefit in meeting the Travel Rule requirements. When digital and fiat assets are solely held in custody, partnered exchanges and corporations will have the peace of mind that they are in compliance with existing regulations.

Etana’s top priorities are the security of our client’s digital and fiat assets, as well as the protection of personal information. In the rapidly evolving crypto industry, regulators are guiding participants to comply with new rules for safety and stability. Etana is prepared for this increase in regulatory standards and we strive to stay ahead of regulatory compliance before it is a requisite. Etana has a history of strict conformance to best AML/KYC practice and has been compliant with the Travel Rule since going operational in 2016. As a qualified custodian , the onboarding process for a prospective Etana client is thorough and compliant with Know Your Customer (KYC) and Anti-Money Laundering (AML) procedures. Among other reasons, our detailed screening process is conducted to verify that a client’s transaction aligns with the Travel Rule’s requirements. For the world of crypto to mature, industry players need to set the standard for taming the Wild West of the digital trading market.

Reputation is built on the trust and security of Etana , and our standards of a regulatory environment stand on the stature of other financial institutions.

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Travel rule for electronic funds and virtual currency transfers

This guidance came into effect on June 1, 2021.

This guidance is applicable to financial entities (FEs), money services businesses (MSBs), foreign MSBs (FMSBs), and casinos. It explains your requirement under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and associated Regulations to include or obtain certain information in relation to an electronic funds transfer (EFT) or a virtual currency (VC) transfer. This requirement is commonly referred to as the travel rule.

**Note : Throughout this guidance EFTs refer to international EFTs and EFTs within Canada sent via a SWIFT MT-103 message or its equivalent. Footnote 1

Who is this guidance for

• Financial entities (FEs)
• Money services businesses (MSBs)
• Foreign money services businesses (FMSBs)

In this guidance

What is the travel rule and when does it apply.

• What should I do if I receive an EFT or a VC transfer that does not include the required information?

The travel rule is the requirement to ensure that specific information (listed below) is included with the information sent or received in an EFT or a VC transfer Footnote 2 . Information received under the travel rule cannot be removed from a transfer. Footnote 3

The travel rule is not a separate record keeping requirement, however, fulfilling it will help you meet your VC and EFT record keeping and reporting requirements.

EFT — travel rule

FEs, MSBs, FMSBs and casinos must include the travel rule information when they initiate an EFT for which an EFT record must be kept. Footnote 4

The required travel rule information for EFTs is : Footnote 5

• the name, address and account number or other reference number (if any) of the person or entity who requested the transfer (originator information);
• the name and address of the beneficiary; and
• if applicable, the beneficiary's account number or other reference number.

FEs, MSBs, FMSBs and casinos must also take reasonable measures to ensure that the travel rule information is included when they receive an EFT , either as an intermediary or as the final recipient. Footnote 6

When sending an incoming or outgoing EFT (after receiving it as an intermediary), FEs, MSBs, FMSBs, and casinos must include the travel rule information they received or obtained through reasonable measures.

For more information on your reporting and record keeping information, see FINTRAC's guidance on:

• Reporting electronic funds transfers to FINTRAC
• Record keeping requirements for financial entities
• Record keeping requirements for money services businesses and foreign money services businesses
• Record keeping requirements for casinos

VC — travel rule

FEs, MSBs and FMSBs must include the travel rule information when they send VC transfers, and must take reasonable measures to ensure that this information is included when they receive VC transfers which require a VC record to be kept . Footnote 7

The required travel rule information for VC transfers is : Footnote 8

• the name, address and the account number or other reference number (if any) of the person or entity who requested the transfer (originator information); and
• the name, address and the account number or other reference number (if any) of the beneficiary.

For more information on your reporting and record keeping requirements for VC transfers, see the following FINTRAC guidance:

• Reporting large virtual currency transactions to FINTRAC

2. What should I do if I receive an EFT or a VC transfer that does not include the required information?

If you receive an EFT or a VC transfer that should include the travel rule information but does not, you must take reasonable measures to obtain that information. Footnote 9 These reasonable measures should be outlined in your policies and procedures.

You must also develop in writing and apply risk-based policies and procedures for determining what to do when, after taking reasonable measures, you were unable to obtain the travel rule information. Your policies and procedures must address under which circumstances you allow, suspend or reject the transaction, and outline any follow-up measures you will take. Footnote 10

For more information, see FINTRAC's Compliance programs requirements guidance .

Details and history

Published: May 2021

For assistance

If you have questions about this guidance, please contact FINTRAC by email at  [email protected] .

Definitions

A chartered accountant, a certified general accountant, a certified management accountant or, if applicable, a chartered professional accountant. ( comptable )

Reference: Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations (PCMLTFR), SOR/2002-184, s. 1(2).

An entity that is engaged in the business of providing accounting services to the public and has at least one partner, employee or administrator that is an accountant. ( cabinet d'expertise comptable )

Reference: PCMLTFR, SOR/2002-184, s. 1(2).

The Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA). ( la Loi )

Reference: Proceeds of Crime (Money Laundering) and Terrorist Financing Administrative Monetary Penalties Regulations (PCMLTFAMPR), SOR/2007-292, s. 1, Proceeds of Crime (Money Laundering) and Terrorist Financing Registration Regulations (PCMLTFRR), SOR/2007-121, s. 1, PCMLTFR, SOR/2002-184, s. 1(2), and Proceeds of Crime (Money Laundering) and Terrorist Financing Suspicious Transaction Reporting Regulations (PCMLTFSTRR), SOR/2001-317, s. 1(2).

Civil penalties that may be issued to reporting entities by FINTRAC for non-compliance with the PCMLTFA and associated Regulations. ( pénalité administrative pécuniaire [PAP] )

An entity is affiliated with another entity if one of them is wholly owned by the other, if both are wholly owned by the same entity or if their financial statements are consolidated. ( entité du même groupe )

Reference: PCMLTFR, SOR/2002-184, s. 4.

Has the same meaning as in subsection 248(1) of the Income Tax Act . ( rente )

A time period that falls in-between immediately and as soon as possible, within which a suspicious transaction report (STR) must be submitted to FINTRAC. The completion and submission of the STR should take priority over other tasks. In this context, the report must be completed promptly, taking into account the facts and circumstances of the situation. While some delay is permitted, it must have a reasonable explanation. ( aussitôt que possible )

Occurs when an individual or entity starts to conduct a transaction that is not completed. For example, a client or a potential client walks away from conducting a $10,000 cash deposit. ( opération tentée )

In respect of verifying identity, means genuine and having the character of an original, credible, and reliable document or record. ( authentique )

A person who is authorized under subsection 45(2). ( personne autorisée )

Reference: Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA), S.C. 2000, c 17, s. 2(1).

A person who is authorized by a holder of a prepaid payment product account to have electronic access to funds or virtual currency available in the account by means of a prepaid payment product that is connected to it. ( utilisateur autorisé )

Beneficial owners are the individuals who are the trustees, and known beneficiaries and settlors of a trust, or who directly or indirectly own or control 25% or more of i) the shares of a corporation or ii) an entity other than a corporation or trust, such as a partnership. The ultimate beneficial owner(s) cannot be another corporation or entity; it must be the actual individual(s) who owns or controls the entity. ( bénéficiaire effectif )

A beneficiary is the individual or entity that will benefit from a transaction or to which the final remittance is made. ( bénéficiaire )

A branch is a part of your business at a distinct location other than your main office. ( succursale )

An entity that carries on the business of providing notary services to the public in British Columbia in accordance with the Notaries Act, R.S.B.C. 1996, c. 334. ( société de notaires de la Colombie-Britannique )

A person who is a member of the Society of Notaries Public of British Columbia. ( notaire public de la Colombie-Britannique )

Coins referred to in section 7 of the Currency Act, notes issued by the Bank of Canada under the Bank of Canada Act that are intended for circulation in Canada or coins or bank notes of countries other than Canada. ( espèces )

Reference: PCMLTFR, SOR/2002-184, s. 1(2) and PCMLTFSTRR, SOR/2001-317, s. 1(2).

A government, organization, board or operator that is referred to in any of paragraphs 5(k) to (k.3) of the Act. ( casino )

Reference: PCMLTFR, SOR/2002-184, s 1(2) and PCMLTFSTRR, SOR/2001-317, s. 1(2).

An individual that holds the title of professional certified translator granted by a Canadian provincial or territorial association or body that is competent under Canadian provincial or territorial law to issue such certification. ( traducteur agréé )

A clarification request is a method used to communicate with money services businesses (MSBs) or foreign money services businesses (FMSBs) when FINTRAC needs more information about their registration form. This request is usually sent by email. ( demande de précisions )

A person or entity that engages in a financial transaction with another person or entity. ( client )

Reference: PCMLTFA, S.C. 2000, c 17, s. 2(1).

The identifying information that you have obtained on your clients, such as name, address, telephone number, occupation or nature of principal business, and date of birth for an individual. ( renseignements d'identification du client )

For the purpose of the criminal record check submitted with an application for registration, a competent authority is any person or organization that has the legally delegated or invested authority, capacity, or power to issue criminal record checks. ( autorité compétente )

Is a transaction conducted by a person or entity, that is completed and results in the movement of funds, virtual currency, or the purchase or sale of an asset. ( opération effectuée )

With respect to a reportable transaction, information related to the instructions provided by the person or entity making the request to the reporting entity to complete a transaction. For example, an individual arrives at a bank and requests to purchase a bank draft. The completing action is the details of how the reporting entity fulfilled the person or entity’s instructions which led to the transaction being completed. This includes what the funds or virtual currency initially brought to the reporting entity was used for (see “disposition”). A transaction may have one or more completing actions depending on the instructions provided by the person or entity. ( action d’achèvement )

The individual, with the necessary authority, that you appoint to be responsible for the implementation of your compliance program. ( agent de conformité )

Written methodology outlining the obligations applicable to your business under the PCMLTFA and its associated Regulations and the corresponding processes and controls you put in place to address your obligations. ( politiques et procédures de conformité )

All elements (compliance officer, policies and procedures, risk assessment, training program, effectiveness review) that you, as a reporting entity, are legally required to have under the PCMLTFA and its associated Regulations to ensure that you meet all your obligations. ( programme de conformité )

Clarifies a set of circumstances or provides an explanation of a situation or financial transaction that can be understood and assessed. ( contexte )

A relationship created by an agreement or arrangement under which an entity referred to in any of paragraphs 5(a), (b), (d),(e) and (e.1) or an entity that is referred to in section 5 and that is prescribed undertakes to provide to a prescribed foreign entity prescribed services or international electronic funds transfers, cash management or cheque clearing services. ( relation de correspondant bancaire )

Reference: PCMLTFA, S.C. 2000, c 17, s. 9.4(3) and PCMLTFR, SOR/2002-184, s. 16(1)(b).

The country where an individual has lived continuously for 12 months or more. The individual must have a dwelling in the country concerned. For greater certainty, a person only has one country of residence no matter how many dwelling places they may have, inside or outside of that country. ( pays de résidence )

A credit card acquiring business is a financial entity that has an agreement with a merchant to provide the following services:

• enabling a merchant to accept credit card payments by cardholders for goods and services and to receive payments for credit card purchases;
• processing services, payment settlements and providing point-of-sale equipment (such as computer terminals); and
• providing other ancillary services to the merchant.

A central cooperative credit society, as defined in section 2 of the Cooperative Credit Associations Act , or a credit union central or a federation of credit unions or caisses populaires that is regulated by a provincial Act other than one enacted by the legislature of Quebec. ( centrale de caisses de crédit )

A website or an application or other software that is used to raise funds or virtual currency through donations. ( plateforme de sociofinancement )

The provision and maintenance of a crowdfunding platform for use by other persons or entities to raise funds or virtual currency for themselves or for persons or entities specified by them. ( services de plateforme de sociofinancement )

In respect of a document or source of information that is used to verify identity, is up to date, and, in the case of a government-issued photo identification document, must not have been expired when the ID was verified. ( à jour )

A person or entity that, in the course of their business activities, buys or sells precious metals, precious stones or jewellery. It includes a department or an agent of His Majesty in right of Canada or an agent or mandatary of His Majesty in right of a province when the department or the agent or mandatary carries out the activity, referred to in subsection 65(1), of selling precious metals to the public. ( négociant en métaux précieux et pierres précieuses )

Has the same meaning as in subsection 248(1) of the Income Tax Act . ( régime de participation différée aux bénéfices )

A record that sets out:

• (a) the date of the deposit;
• (b) the name of the person or entity that makes the deposit;
• (c) the amount of the deposit and of any part of it that is made in cash;
• (d) the method by which the deposit is made; and
• (e) the number of the account into which the deposit is made and the name of each account holder.

A business is directing services at persons or entities in Canada if at least one of the following applies:

• The business's marketing or advertising is directed at persons or entities located in Canada;
• The business operates a ".ca" domain name; or,
• The business is listed in a Canadian business directory.

Additional criteria may be considered, such as if the business describes its services being offered in Canada or actively seeks feedback from persons or entities in Canada. ( diriger des services )

For the purpose of section 151 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations (PCMLTFR), a digital ledger that is maintained by multiple persons or entities and that can only be modified by a consensus of those persons or entities. ( registres distribués )

Reference: PCMLTFR, SOR/2002-184, s. 151(2).

With respect to a reportable transaction, the disposition is what the funds or virtual currency was used for. For example, an individual arrives at a bank with cash and purchases a bank draft. The disposition is the purchase of the bank draft. ( répartition )

The transmission—by any electronic, magnetic or optical means—of instructions for the transfer of funds, including a transmission of instructions that is initiated and finally received by the same person or entity. In the case of SWIFT messages, only SWIFT MT-103 messages and their equivalent are included. It does not include a transmission or instructions for the transfer of funds:

• (a) that involves the beneficiary withdrawing cash from their account;
• (b) that is carried out by means of a direct deposit or pre-authorized debit;
• (c) that is carried out by cheque imaging and presentment
• (d) that is both initiated and finally received by persons or entities that are acting to clear or settle payment obligations between themselves; or
• (e) that is initiated or finally received by a person or entity referred to in paragraphs 5(a) to (h.1) of the Act for the purpose of internal treasury management, including the management of their financial assets and liabilities, if one of the parties to the transaction is a subsidiary of the other or if they are subsidiaries of the same corporation.

Has the same meaning as in subsection 248(1) of the Income Tax Act . ( régime de participation des employés aux bénéfices )

A body corporate, a trust, a partnership, a fund or an unincorporated association or organization. ( entité )

Actual events, actions, occurrences or elements that exist or are known to have happened or existed. Facts are not opinions. For example, facts surrounding a transaction or multiple transactions could include the date, time, location, amount or type of transaction or could include the account details, particular business lines, or the client's financial history. ( faits )

For the purposes of subsection 9.3(1) of the Act, a prescribed family member of a politically exposed foreign person, a politically exposed domestic person or a head of an international organization is:

• (a) their spouse or common-law partner;
• (b) their child;
• (c) their mother or father;
• (d) the mother or father of their spouse or common-law partner; or
• (e) a child of their mother or father.

Reference: PCMLTFR, SOR/2002-184, s. 2(1).

A currency that is issued by a country and is designated as legal tender in that country. ( monnaie fiduciaire )

In respect of an electronic funds transfer, means the receipt of the instructions by the person or entity that is to make the remittance to a beneficiary. ( destinataire )

• (a) an entity that is referred to in any of paragraphs 5(a), (b) and (d) to (f) of the Act;
• (b) a financial services cooperative;
• (i) loans that are made by the insurer to a policy holder if the insured person has a terminal illness that significantly reduces their life expectancy and the loan is secured by the value of an insurance policy;
• (ii) loans that are made by the insurer to the policy holder for the sole purpose of funding the life insurance policy; and
• (iii) advance payments to which the policy holder is entitles that are made to them by the insurer;
• (d) a credit union central when it offers financial services to a person, or to an entity that is not a member of that credit union central; and
• (e) a department, or an entity that is an agent of His Majesty in right of Canada or an agent or mandatary of His Majesty in right of a province, when it carries out an activity referred to in section 76.

The Financial Action Task Force on Money Laundering established in 1989. ( Groupe d'action financière )

A financial services cooperative that is regulated by an Act respecting financial services cooperatives, CQLR, c. C-67.3, other than a caisse populaire. ( coopérative de services financiers )

A fiat currency that is issued by a country other than Canada. ( devise )

An exchange, at the request of another person or entity, of one fiat currency for another. ( opération de change en devise )

A record respecting a foreign currency exchange transaction—including an entry in a transaction register—that sets out:

• (a) the date of the transaction;
• (b) in the case of a transaction of $3,000 or more, the name and address of the person or entity that requests the exchange, the nature of their principal business or their occupation and, in the case of a person, their date of birth;
• (c) the type and amount of each of the fiat currencies involved in the payment made and received by the person or entity that requests the exchange;
• (d) the method by which the payment is made and received;
• (e) the exchange rates used and their source;
• (f) the number of every account that is affected by the transaction, the type of account and the name of each account holder; and
• (g) every reference number that is connected to the transaction and has a function equivalent to that of an account number.

Persons and entities that do not have a place of business in Canada, that are engaged in the business of providing at least one of the following services that is directed at persons or entities in Canada, and that provide those services to their clients in Canada:

• (i) foreign exchange dealing,
• (ii) remitting funds or transmitting funds by any means or through any person, entity or electronic funds transfer network,
• (iii) issuing or redeeming money orders, traveller's cheques or other similar negotiable instruments except for cheques payable to a named person or entity,
• (iv) dealing in virtual currencies, or
• (v) any prescribed service.

Reference: PCMLTFA, S.C. 2000, c 17, s. 5(h.1), PCMLTFRR, SOR/2007-121, s. 1 and PCMLTFR, SOR/2002-184, s. 1(2).

Except for the purposes of Part 2, means a country other than Canada and includes any political subdivision or territory of a foreign state. ( État étranger )

• (a) cash and other fiat currencies, and securities, negotiable instruments or other financial instruments that indicate a title or right to or interest in them; or
• (b) a private key of a cryptographic system that enables a person or entity to have access to a fiat currency other than cash.

For greater certainty, it does not include virtual currency. ( fonds )

A person who, at a given time, holds—or has held within a prescribed period before that time—the office or position of head of

• a) an international organization that is established by the governments of states;
• b) an institution of an organization referred to in paragraph (a); or
• c) an international sports organization.

Reference: PCMLTFA, S.C. 2000, c 17, s. 9.3(3).

In respect of submitting a Terrorist Property Report (TPR), the time period within which a TPR must be submitted, which does not allow for any delay prior to submission. ( immédiatement )

A record that sets out the name and address of a person or entity and:

• (a) in the case of a person, their date of birth and the nature of their principal business or their occupation; and
• (b) in the case of an entity, the nature of its principal business.

In respect of an electronic funds transfer, means the first transmission of the instructions for the transfer of funds. ( amorcer )

For the purpose of section 15 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations (PCMLTFR), means a trust that is established by a corporation or other entity for a particular business purpose and includes a pension plan trust, a pension master trust, a supplemental pension plan trust, a mutual fund trust, a pooled fund trust, a registered retirement savings plan trust, a registered retirement income fund trust, a registered education savings plan trust, a group registered retirement savings plan trust, a deferred profit sharing plan trust, an employee profit sharing plan trust, a retirement compensation arrangement trust, an employee savings plan trust, a health and welfare trust, an unemployment benefit plan trust, a foreign insurance company trust, a foreign reinsurance trust, a reinsurance trust, a real estate investment trust, an environmental trust and a trust established in respect of endowment, a foundation or a registered charity. ( fiducie institutionnelle )

Reference: PCMLTFR, SOR/2002-184, s. 15(2).

An electronic funds transfer other than for the transfer of funds within Canada. ( télévirement international )

A personal trust, other than a trust created by will. ( fiducie entre vifs )

Objects that are made of gold, silver, palladium, platinum, pearls or precious stones and that are intended to be worn as a personal adornment. ( bijou )

A record that indicates the receipt of an amount of $10,000 or more in cash in a single transaction and that contains the following information:

• (a) the date of the receipt;
• (b) if the amount is received for deposit into an account, the number of the account, the name of each account holder and the time of the deposit or an indication that the deposit is made in a night deposit box outside the recipient's normal business hours;
• (c) the name and address of every other person or entity that is involved in the transaction, the nature of their principal business or their occupation and, in the case of a person, their date of birth;
• (d) the type and amount of each fiat currency involved in the receipt;
• (e) the method by which the cash is received;
• (f) if applicable, the exchange rates used and their source;
• (g) the number of every other account that is affected by the transaction, the type of account and the name of each account holder
• (h) every reference number that is connected to the transaction and has a function equivalent to that of an account number;
• (i) the purpose of the transaction;
• (i) the method of remittance;
• (ii) if the remittance is in funds, the type and amount of each type of funds involved;
• (iii) if the remittance is not in funds, the type of remittance and its value, if different from the amount of cash received; and
• (iv) the name of every person or entity involved in the remittance and their account number or policy number or, if they have no account number or policy number, their identifying number; and
• (i) the type of precious metals, precious stones or jewellery;
• (ii) the value of the precious metals, precious stones or jewellery, if different from the amount of cash received, and
• (iii) the wholesale value of the precious metals, precious stones or jewellery.

A record that indicates the receipt of an amount of $10,000 or more in virtual currency in a single transaction and that contains the following information:

• (b) if the amount is received for deposit into an account, the name of each account holder;
• (d) the type and amount of each virtual currency involved in the receipt;
• (f) the number of every other account that is affected by the transaction, the type of account and the name of each account holder;
• (g) every reference number that is connected to the transaction and has a function equivalent to that of an account number;
• (h) every transaction identifier, including the sending and receiving addresses; and
• (ii) the value of the precious metals, precious stones or jewellery, if different from the amount of virtual currency received; and

A person or entity that is authorized under provincial legislation to carry on the business of arranging contracts of life insurance. ( représentant d'assurance-vie )

A life company or foreign life company to which the Insurance Companies Act applies or a life insurance company regulated by a provincial Act. ( société d'assurance-vie )

Has the same meaning as in section 1 of the Regulations Implementing the United Nations Resolutions on the Suppression of Terrorism . ( personne inscrite )

Reference: PCMLTFSTRR, SOR/2001-317, s. 1(2).

Life insurance brokers or agents that act as facilitators between other life insurance brokers or agents and life insurance companies.  MGAs typically offer services to assist with insurance agents contracting and commission payments, facilitate the flow of information between insurer and agent, and provide training to, and compliance oversight of, insurance agents. ( agent général de gestion )

A person who acts, under a mandate or agreement, for another person or entity. ( mandataire )

When a person or entity uses promotional materials such as advertisements, graphics for websites or billboards, etc., with the intent to promote money services business (MSB) services and to acquire business from persons or entities in Canada. ( marketing ou publicité )

In relation to sections 24.1 to 39, the Minister of Public Safety and Emergency Preparedness and, in relation to any other provision of this Act, the Minister of Finance. ( ministre )

An offence under subsection 462.31(1) of the Criminal Code . The United Nations defines money laundering as "any act or attempted act to disguise the source of money or assets derived from criminal activity." Essentially, money laundering is the process whereby "dirty money"—produced through criminal activity—is transformed into "clean money," the criminal origin of which is difficult to trace. ( infraction de recyclage des produits de la criminalité )

Potential red flags that could initiate suspicion or indicate that something may be unusual in the absence of a reasonable explanation. [Indicateurs de blanchiment d'argent (BA) et de financement du terrorisme (FT) (indicateurs de BA/FT)]

A person or entity that has a place of business in Canada and that is engaged in the business of providing at least one of the following services:

Reference: PCMLTFA, S.C. 2000, c 17, s. 5(h), PCMLTFRR, SOR/2007-121, s. 1 and PCMLTFR, SOR/2002-184, s. 1(2).

An individual or entity authorized to deliver services on behalf of a money services business (MSB). It is not an MSB branch. ( mandataire d'une entreprise de services monétaires )

An entity's type or field of business. Also applies to an individual in the case of a sole proprietorship. ( nature de l'entreprise principale )

Changes to the structure or operations of a business when new services, activities, or locations are put in place. For example, changes to a business model or business restructuring. ( nouveaux développements )

The adoption of a technology that is new to a business. For example, when a business adopts new systems or software such as transaction monitoring systems or client onboarding and identification tools. ( nouvelles technologies )

There is no clear explanation to account for suspicious behaviour or information. ( sans raison apparente )

The job or profession of an individual. ( profession ou métier )

An individual. ( personne )

In respect of an account, means a person who is authorized to instruct on the account or make changes to the account, such as modifying the account type, updating the account contact details, and in the case of a credit card account, requesting a limit increase or decrease, or adding or removing card holders. A person who is only able to conduct transactions on the account is not considered a person authorized to give instructions. ( personne habilitée à donner des instructions )

A person who, at a given time, holds—or has held within a prescribed period before that time—one of the offices or positions referred to in any of paragraphs (a) and (c) to (j) in or on behalf of the federal government or a provincial government or any of the offices or positions referred to in paragraphs (b) and (k):

• (a) Governor General, lieutenant governor or head of government;
• (b) member of the Senate or House of Commons or member of a legislature of a province;
• (c) deputy minister or equivalent rank;
• (d) ambassador, or attaché or counsellor of an ambassador;
• (e) military officer with a rank of general or above;
• (f) president of a corporation that is wholly owned directly by His Majesty in right of Canada or a province;
• (g) head of a government agency;
• (h) judge of an appellate court in a province, the Federal Court of Appeal or the Supreme Court of Canada;
• (i) leader or president of a political party represented in a legislature;
• (j) holder of any prescribed office or position; or
• (k) mayor, reeve or other similar chief officer of a municipal or local government.

A person who holds or has held one of the following offices or positions in or on behalf of a foreign state:

• (a) head of state or head of government;
• (b) member of the executive council of government or member of a legislature;
• (f) president of a state-owned company or a state-owned bank;
• (h) judge of a supreme court, constitutional court or other court of last resort;
• (i) leader or president of a political party represented in a legislature; or
• (j) holder of any prescribed office or position.

In regards to completing a suspicious transaction report (STR), the likelihood that a transaction may be related to a money laundering/terrorist financing (ML/TF) offence. For example, based on your assessment of facts, context and ML/TF indicators you have reasonable grounds to suspect that a transaction is related to the commission or attempted commission of an ML/TF offence. ( possibilité )

Gold, silver, palladium or platinum in the form of coins, bars, ingots or granules or in any other similar form. ( métal précieux )

Diamonds, sapphires, emeralds, tanzanite, rubies or alexandrite. ( pierre précieuse )

A product that is issued by a financial entity and that enables a person or entity to engage in a transaction by giving them electronic access to funds or virtual currency paid to a prepaid payment product account held with the financial entity in advance of the transaction. It excludes a product that:

• (a) enables a person or entity to access a credit or debit account or one that is issued for use only with particular merchants; or
• (b) is issued for single use for the purposes of a retail rebate program.

An account – other than an account to which only a public body or, if doing so for the purposes of humanitarian aid, a registered charity as defined in subsection 248(1) of the Income Tax Act, can add funds or virtual currency – that is connected to a prepaid payment product and that permits:

• (a) funds or virtual currency that total $1,000 or more to be added to the account within a 24-hour period; or
• (b) a balance of funds or virtual currency of $1,000 or more to be maintained.

Prescribed by regulations made by the Governor in Council. ( Version anglaise seulement )

The likelihood in regards to completing a suspicious transaction report (STR) that a financial transaction is related to a money laundering/terrorist financing (ML/TF) offence. For example, based on facts, having reasonable grounds to believe that a transaction is probably related to the commission or attempted commission of an ML/TF offence. ( probabilité )

A judicial order that compels a person or entity to disclose records to peace officers or public officers. ( ordonnance de communication )

• (a) a department or an agent of His Majesty in right of Canada or an agent or mandatary of His Majesty in right of a province;
• (b) an incorporated city or town, village, metropolitan authority, township, district, county, rural municipality or other incorporated municipal body in Canada or an agent or mandatary in Canada of any of them; and
• (c) an organization that operates a public hospital and that is designated by the Minister of National Revenue as a hospital authority under the Excise Tax Act , or an agent or mandatary of such an organization.

A person or entity that is authorized under provincial legislation to act as an agent or mandatary for purchasers or vendors in respect of the purchase or sale of real property or immovables. ( courtier ou agent immobilier )

A person or entity that, in any calendar year after 2007, has sold to the public, other than in the capacity of a real estate broker or sales representative:

• (a) five or more new houses or condominium units;
• (b) one or more new commercial or industrial buildings; or
• (c) one or more new multi-unit residential buildings each of which contains five or more residential units, or two or more new multi-unit residential buildings that together contain five or more residential units.

Steps taken to achieve a desired outcome, even if they do not result in the desired outcome. For example, this can include doing one or more of the following:

• asking the client,
• conducting open source searches,
• retrieving information already available, including information held in non-digital formats, or
• consulting commercially available information.

A record that indicates the receipt of an amount of funds and that contains the following information:

• (b) if the amount is received from a person, their name, address and date of birth and the nature of their principal business or their occupation;
• (c) if the amount is received from or on behalf of an entity, the entity's name and address and the nature of their principal business;
• (d) the amount of the funds received and of any part of the funds that is received in cash;
• (e) the method by which the amount is received;
• (f) the type and amount of each fiat currency involved in the receipt;
• (g) if applicable, the exchange rates used and their source;
• (h) the number of every account that is affected by the transaction in which the receipt occurs, the type of account and the name of each account holder;
• (i) the name and address of every other person or entity that is involved in the transaction, the nature of their principal business or their occupation and, in the case of a person, their date of birth;
• (j) every reference number that is connected to the transaction and has a function equivalent to that of an account number; and
• (k) the purpose of the transaction.

Has the same meaning as in subsection 248(1) of the Income Tax Act . ( régime de pension agréé )

Has the same meaning as in subsection 248(1) of the Income Tax Act . ( fonds enregistré de revenu de retraite )

In respect of information that is used to verify identity, means that the source is well known, reputable, and is considered one that you trust to verify the identity of the client. ( fiable )

An individual in Canada that has been appointed by a person or entity that is a foreign money services business (FMSB), pursuant to the PCMLTFA, to receive notices and documents on behalf of the FMSB. ( représentant du service )

The review and documentation of potential money laundering/terrorist financing risks in order to help a business establish policies, procedures and controls to detect and mitigate these risks and their impact. ( évaluation des risques )

A person or entity that is referred to in paragraph 5(g) of the Act. ( courtier en valeurs mobilières )

In respect of an entity, means:

• (a) a director of the entity who is one of its full-time employees;
• (b) the entity's chief executive officer, chief operating officer, president, secretary, treasurer, controller, chief financial officer, chief accountant, chief auditor or chief actuary, or any person who performs any of those functions; or
• (c) any other officer who reports directly to the entity's board of directors, chief executive officer or chief operating officer. 

An agreement between a money services business (MSB) and an organization according to which the MSB will provide any of the following MSB services on an ongoing basis:

• money transfers;
• foreign currency exchange;
• issuing or redeeming money orders, traveller's cheques or anything similar; or
• dealing in virtual currencies.

A settlor is an individual or entity that creates a trust with a written trust declaration. The settlor ensures that legal responsibility for the trust is given to a trustee and that the trustee is provided with a trust instrument document that explains how the trust is to be used for the beneficiaries. A settlor includes any individual or entity that contributes financially to that trust, either directly or indirectly. ( constituant )

A foreign financial institution that:

• (i) is located at a fixed address—where it employs one or more persons on a full-time basis and maintains operating records related to its banking activities—in a country in which it is authorized to conduct banking activities; and
• (ii) is subject to inspection by the regulatory authority that licensed it to conduct banking activities; and
• (b) is not controlled by, or under common control with, a depository institution, credit union or foreign financial institution that maintains a place of business referred to in paragraph (a) in Canada or in a foreign country.

Reference: PCMLTFR, SOR/2002-184, s. 1(1).

Includes an electronic signature or other information in electronic form that is created or adopted by a client of a person or entity referred to in section 5 of the Act and that is accepted by the person or entity as being unique to that client. ( signature )

In respect of an account, means a document that is signed by a person who is authorized to give instructions in respect of the account, or electronic data that constitutes the signature of such a person. ( fiche-signature )

The issuer or provider of information or documents for verifying identification. ( source )

The origin of the particular funds or VC used to carry out a specific transaction or to attempt to carry out a transaction. It is how the funds were acquired, not where the funds may have been transferred from. For example, the source of funds could originate from activities or occurrences such as employment income, gifts, the sale of a large asset, criminal activity, etc. ( origine des fonds ou de la monnaie virtuelle (MV) )

The origin of a person's total assets that can be reasonably explained, rather than what might be expected. For example, a person's wealth could originate from an accumulation of activities and occurrences such as business undertakings, family estates, previous and current employment income, investments, real estate, inheritance, lottery winnings, etc. ( origine de la richesse )

With respect to a reportable transaction, information related to the instructions provided by the person or entity making the request to the reporting entity to start a transaction. For example, an individual arrives at a bank and requests to purchase a bank draft. The starting action is the details of the instructions for the purchase which includes the funds or virtual currency that the requesting person or entity brought to the reporting entity. A transaction must have at least one starting action. ( action d’amorce )

The Society for Worldwide Interbank Financial Telecommunication. ( SWIFT )

Has the same meaning as in subsection 83.01(1) of the Criminal Code . ( activité terroriste )

An offence under section 83.02, 83.03 or 83.04 of the Criminal Code or an offence under section 83.12 of the Criminal Code arising out of a contravention of section 83.08 of that Act. 

A terrorist financing offence is knowingly collecting or giving property (such as money) to carry out terrorist activities. This includes the use and possession of any property to help carry out the terrorist activities. The money earned for terrorist financing can be from legal sources, such as personal donations and profits from a business or charitable organization or from criminal sources, such as the drug trade, the smuggling of weapons and other goods, fraud, kidnapping and extortion. ( infraction de financement des activités terroristes )

Any individual or entity that instructs another individual or entity to act on their behalf for a financial activity or transaction. ( tiers )

Has the same meaning as in section 2 of the Canadian Security Intelligence Service Act . ( menaces envers la sécurité du Canada )

A written and implemented program outlining the ongoing training for your employees, agents or other individuals authorized to act on your behalf. It should contain information about all your obligations and requirements to be fulfilled under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and its associated Regulations. ( programme de formation )

A right of property held by one individual or entity (a trustee) for the benefit of another individual or entity (a beneficiary). ( fiducie )

A company that is referred to in any of paragraphs 5(d) to (e.1) of the Act. ( société de fiducie )

A trustee is the individual or entity authorized to hold or administer the assets of a trust. ( fiduciaire )

In the context of civil law, a person who has been lawfully appointed to the care of the person and property of a minor. ( tuteur )

A review, conducted every two years (at a minimum), by an internal or external auditor to test the effectiveness of your policies and procedures, risk assessment, and training program. ( examen bisannuel de l'efficacité )

In respect of a document or information that is used to verify identity, appears legitimate or authentic and does not appear to have been altered or had any information redacted. The information must also be valid according to the issuer, for example if a passport is invalid because of a name change, it is not valid for FINTRAC purposes. ( valide )

To refer to certain information or documentation, in accordance with the prescribed methods, to identify a person or entity (client). ( vérifier l'identité )

A corporation or trust that has minimum net assets of $75 million CAD on its last audited balance sheet. The corporation's shares or units have to be traded on a Canadian stock exchange or on a stock exchange designated under subsection 262(1) of the Income Tax Act. The corporation or trust also has to operate in a country that is a member of the Financial Action Task Force (FATF). ( personne morale ou fiducie dont l'actif est très important )

A contravention of the Act or the regulations that is designated as a violation by regulations made under subsection 73.1(1). ( violation )

• (a) a digital representation of value that can be used for payment or investment purposes that is not a fiat currency and that can be readily exchanged for funds or for another virtual currency that can be readily exchanged for funds; or
• (b) a private key of a cryptographic system that enables a person or entity to have access to a digital representation of value referred to in paragraph (a).

An exchange, at the request of another person or entity, of virtual currency for funds, funds for virtual currency or one virtual currency for another. ( opération de change en monnaie virtuelle )

A record respecting a virtual currency exchange transaction—including an entry in a transaction register—that sets out:

• (b) in the case of a transaction of $1,000 or more, the name and address of the person or entity that requests the exchange, the nature of their principal business or their occupation and, in the case of a person, their date of birth;
• (c) the type and amount of each type of funds and each of the virtual currencies involved in the payment made and received by the person or entity that requests the exchange;
• (f) the number of every account that is affected by the transaction, the type of account and the name of each account holder;
• (g) every reference number that is connected to the transaction and has a function equivalent to that of an account number; and
• (h) every transaction identifier, including the sending and receiving addresses.

In respect of an electronic funds transfer (EFT) report or a large virtual currency transaction report, a working day is a day between and including Monday to Friday. It excludes Saturday, Sunday, and a public holiday. ( jour ouvrable )

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FinCEN Advisory

This Advisory provides answers to some of the most frequently asked questions concerning the transmittal of funds "Travel" regulation.

A Bank Secrecy Act (BSA) rule [31 CFR 103.33(g)]—often called the“Travel” rule—requires all financial institutions to pass on certain informationto the next financial institution, in certain funds transmittals involving morethan one financial institution. This rule became effective May 28, 1996 and was issued by the TreasuryDepartment’s Financial Crimes Enforcement Network (FinCEN). This rulewas issued by FinCEN concurrently with the new BSA recordkeeping rules[31 CRF 103.33(e) and (f)) for funds transfers and transmittals of funds]. The funds transfer rules are designed to help law enforcement agenciesdetect, investigate and prosecute money laundering and other financial crimesby preserving an information trail about persons sending and receiving fundsthrough funds transfer systems. The attached guidance is intended to answer general, basic questionsconcerning the implementation of the new regulations. It is not meant to becomprehensive and does not replace or supersede the regulations. Thesequestions and answers and the Travel rule should be examined in concert withthe Treasury’s related recordkeeping rule concerning the transmittal of funds. For additional information concerning funds transfers, please refer toFinCEN Advisory Issue 3 entitled “Funds Transfers: Questions & Answers.”This advisory, as well as other information relating to FinCEN programs andTreasury’s counter-money laundering efforts, may be viewed by visiting FinCEN’s website at: https://www.fincen.gov or by accessing the BSA Bulletin Board via computer modem at(313) 234-1453. Stanley E. Morris Director Attachment:

GUIDANCE FOR FINANCIAL INSTITUTIONS ON THE TRANSMITTAL OF FUNDS "TRAVEL" REGULATIONS

The Treasury Department's Financial Crimes Enforcement Network (FinCEN) offers the followingguidance to financial institutions on the transmittal of funds "Travel" rule. This guidance is intended to answer general, basic questions concerning the implementation of the new regulations. It is not meant to be comprehensive and does not replace or supersede the regulations. These questions and answers and the Travel rule should be examined in concert with the Treasury's related recordkeeping rule concerning the transmittal of funds. 1. Are all transmittals of funds subject to this rule? No. Only transmittals of funds equal to or greater than $3,000 (or its foreign equivalent) are subject to this rule, regardless of whether or not currency is involved. In addition, transmittals of funds governed by the Electronic Funds Transfer Act (Reg E) or made through ATM, or point of sale systems are not subject to this rule. 2. What are the "Travel" rule's requirements? All transmittor's financial institutions must include and send the following in the transmittal order: The name of the transmittor, The account number of the transmittor, if used, The address of the transmittor, The identity of the transmittor's financial institution, The amount of the transmittal order, The execution date of the transmittal order, and The identity of the recipient's financial institution; and, if received: The name of the recipient, The address of the recipient, The account number of the recipient, and Any other specific identifier of the recipient. An intermediary financial institution must pass on all of the information it receives from a transmittor's financial institution or the preceding intermediary financial institution, but has no general duty to retrieve information not provided by the transmittor's financial institution or the preceding intermediary financial institution. Exceptions are noted below. However, if the system used to effect the transmittal of funds is not currently designed to enable these requirements to be met, the name, address, account of the transmittor and the identity of the transmittor's financial institution need not be passed on until such time as the bank that sends the order (to the Federal Reserve Bank or otherwise) completes its conversion to the expanded Fedwire message format. Moreover, if any lawful order is received at, or if a request from another financial institution is made to a recipient's financial institution, all financial institutions must go back to the transmittor's financial institution, or any other preceding financial institution, if the transmittor's financial institution is unknown, and retrieve information not included in the transmittal of funds due to system limitations. 3. Are there any exceptions to these requirements? Yes. If the transmittor and the recipient are the same person, and the transmittor's financial institution and the recipient's financial institution are the same domestic bank or domestic securities broker, the transaction is excepted from the requirement contained in these new rules. In addition, if both the transmittor and the recipient, that is, as defined, the beneficial recipient, are any of the following, then the transmittal of funds is not subject to these rules: Domestic bank; Wholly owned domestic subsidiary of a domestic bank; Domestic broker or dealer in securities; Wholly owned domestic subsidiary of a domestic broker or dealer in securities; The United States; Federal agency or instrumentality; State or local government; or State or local agency or instrumentality. 4. Does this rule require any reporting to the government of any information? No. However, if a transmittal of funds seems to the financial institution to be suspicious, then aSuspicious Activity Report is required, if the financial institution is subject to the Bank Secrecy Act's suspicious activity reporting requirement. 5. How long does a financial institution have to keep records required by these new rules? Five (5) years. 6. What is the benefit of this rule to the public? Law enforcement authorities have identified instances to the Treasury in which records maintained byfinancial institutions were incomplete or insufficient and thereby hampered criminal investigations. In addition, in certain criminal investigations, financial institutions were unable, on a timely basis, to provide law enforcement authorities with useful financial records of transmittals of funds. This rule was created to ensure that in criminal investigations, as well as tax or regulatory proceedings, sufficient information would be available to quickly enable authorities to determine the source of the transmittal of funds and its recipient. Finally, it is anticipated that this rule will more easily permit law enforcement authorities to determine the parties to a transaction. 7. What is a financial institution for the purposes of this rule? The term "financial institution" includes: banks; securities brokers or dealers; casinos subject to the Bank Secrecy Act; money transmitters, check cashers, currency exchangers, and money order issuersand sellers subject to the Bank Secrecy Act. Please see 31 CFR 103.11 for more information. 8. Does this rule treat banks and non-bank financial institutions differently? No. Banks and non-bank financial institutions are treated identically under the Travel rule. 9. What are some of the implications of the Travel rule for financial institutions subject to this rule? The most important implication is that financial institutions must be aware that if a transmittal of funds involves both bank and non-bank financial institutions, each financial institution must carefully analyze and understand all of the definitions that apply to its role in the transmittal of funds. This is important because the rule's requirements on financial institutions differ, depending on what role a financial institution plays in a transmittal of funds. For example , in a situation in which the customer of a securities broker initiates a transmittal of funds that is sent through a bank, that bank is an intermediary financial institution for the purposes of the Travel rule. The next important implication is that financial institutions must carefully understand the role of the succeeding financial institution in the chain of each transmittal of funds, particularly where a transmittal of funds moves from a bank to a non-bank, or vice versa. This is important because the Travel rule's requirement to pass information to the next financial institution in the chain implicitly requires financial institutions that carry out transmittals of funds to coordinate the transfer of information required by this new rule. Finally, as the range of services offered by financial institutions expands, financial institutions must recognize that a single transmittal may involve two or more funds transfer systems. In such cases, it is important that financial institutions understand their roles in such a complex transmittal of funds, because their duties under this rule arise from their role(s) in the transmittal of funds. 10. What is the relationship between the terms used in this rule and those used within Article 4A of the Uniform Commercial Code (UCC)? This rule uses terms that are intended to parallel those used in UCC Article 4A, but that are applicable to all financial institutions, as defined within the Bank Secrecy Act's implementing regulations.

Terms for all financial institutions:

UCC 4A terms:

Transmittal of funds

Funds transfer

Transmittal order

Payment order

Transmittor

Transmittor's financial institution

Originator's Bank

Intermediary financial institution

Intermediary bank

Recipient's financial institution

Beneficiary's bank

Beneficiary

Receiving financial institution

Receiving bank

11. Do the terms created in this regulation apply to transmittals of funds to or from anywhere in the world? Yes. However, the requirements of the Bank Secrecy Act apply only to activities of financial institutions within the United States. Thus, for example, part, but not all, of an international transmittal of funds can be subject to the Travel rule. 12. Is this rule limited to wire transfers? No. The term transmittal of funds includes other transactions and transfers in addition to wire transfers or electronic transfers. 13. What are examples of transmittals of funds that are not wire transfers? Financial institutions sometimes carry out transmittals of funds using correspondent accounts or journal entry transfers such as "due from" and "due to" accounts. In such cases, covered transmittals of funds have occurred even though no wire transfer has occurred. In addition, a check can be the transmittal order within a transmittal of funds. This limited case occurs when Customer 1 goes into Financial Institution A and orders a transmittal of funds be sent to Customer 2 at Financial Institution B. Financial Institution A, perhaps because it is a small financial institution or because the transaction involves a function (such as a trust) that is segregated from the rest of the financial institution, sends a check, payable to Financial Institution B, directly to Financial Institution B, and does not send the check directly to Customer 1 or to Customer 2. This check must be Financial Institution A's own check (however, it need not be drawn on Financial Institution A), and not the check of the customer. This check contains accompanying instructions to have Financial Institution B subsequently credit Customer 2's account. In such a case, the check and its instructions are the transmittal order effecting a transmittal of funds. 14. How should aggregated transmittals of funds be treated? This is a situation where a financial institution aggregates many separate requests for transmittals of funds into one combined transmittal of funds. Whenever a financial institution aggregates separate transmittors from separate transmittals of funds, the transmittor's financial institution itself becomes the transmittor, for the purpose of the Travel rule. Conversely, any time a financial institution combines separate recipients from separate transmittals of funds, the recipient's financial institution itself becomes the recipient, for the purpose of the Travel rule. For example, if a money transmitter has five (5) customers who wish to have funds disbursed to fiveseparate recipients at a separate money transmitter, and the money transmitter uses a bank to carry out the movement of funds, the bank might aggregate the five (5) separate customers. In such an instance and for the purposes of the Travel rule, the bank may list as the transmittor for the transmittors' money transmitter, and the recipient as the recipients' money transmitter. However, the transmittors' money transmitter itself is independently obligated to make travel the required information to the recipients' money transmitter. Thus, the information is still required to travel in an aggregated transmittal of funds, although not necessarily in the same manner or by the same parties as in a nonaggregated transmittal of funds. 15. How should joint party transmittals of funds be treated? For example, Ms. A and Ms. B, sisters with different names and addresses, jointly act as the transmittor or as the recipient. In such cases, it may be impossible to transfer all the information required under the Travel rule. In this instance, the Treasury suggests the following: When a transmittal of funds is initiated by more than one transmittor, or sent to more than one recipient, the transmittor's financial institution may select one transmittor, or one recipient, as the person whose information must be passed under the ÒTravelÓ rule. In all cases involving a transmittal of funds from a joint account, the account holder that ordered the transmittal of funds should be identified as the transmittor on the transmittal order. Please note that for the Joint Rule [31 CFR 103.33(e) and (f)], records must still be kept on all parties. 16. How should a financial institution treat a customer who uses a code name or a pseudonym, or a customer who has requested that the financial institution hold his/her mail? In all such cases, the financial institution must use the customer's true name, and the customer'saddress. The use of a code name, or pseudonym is prohibited. Similarly, a financial institution mustnot use the financial institution's own address, except where that is the actual address of record of the person. 17. To whom can a financial institution go should it have further questions? Any financial institution may contact its primary Bank Secrecy Act examination authority, or theTreasury Department's Financial Crimes Enforcement Network can be contacted regarding questions onthe Bank Secrecy Act rules at (800) 949-2732 or (703) 905-3920.

FinCEN Advisory is a product of the Financial Crimes Enforcement Network, Department of the Treasury, Post Office Box 39, Vienna, Virginia 22183. For more information about FinCEN’s programs, visit the FinCEN web site at https://www.fincen.gov. General questions or comments regarding FinCEN publications should be addressed to the Office of Communications, FinCEN, (703) 905-3773. Information may also be faxed to (703) 905-3885.

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Biden-Harris Administration Finalizes Strongest Ever Greenhouse Gas Standards for Heavy-Duty Vehicles to Protect Public Health and Address the Climate Crisis While Keeping the American Economy Moving

March 29, 2024

WASHINGTON – Today, March 29, the U.S. Environmental Protection Agency announced final national greenhouse gas pollution standards for heavy-duty vehicles, such as freight trucks and buses, for model years 2027 through 2032. The standards will avoid 1 billion tons of greenhouse gas emissions and provide $13 billion in annualized net benefits to society related to public health, the climate, and savings for truck owners and operators. The final standards will also reduce dangerous air pollution, especially for the 72 million people in the United States who live near truck freight routes, bear the burden of higher levels of pollution, and are more likely to be people of color or come from low-income households.

The “ Greenhouse Gas Emissions Standards for Heavy-Duty Vehicles - Phase 3” standards will provide greater certainty for industry, while catalyzing private investment, supporting U.S. manufacturing jobs in advanced vehicle technologies, and invigorating and strengthening the U.S. economy. Over the next decade, these final standards, paired with President Biden’s historic Investing in America agenda and investments in U.S. manufacturing, will set the U.S. heavy-duty sector on a trajectory for sustained growth.

EPA’s latest modeling shows that the final standards will result in greater reductions of pollution than the proposed rule, while providing more time and flexibility for manufacturers to develop, scale, and deploy clean heavy-duty vehicle technologies. The 1 billion tons of greenhouse gas emissions avoided by these standards is equivalent to the emissions from more than 13 million tanker trucks’ worth of gasoline. With this action, the Biden-Harris Administration is continuing to deliver on the most ambitious climate agenda in history while advancing a historic commitment to environmental justice.

“In finalizing these emissions standards for heavy-duty vehicles like trucks and buses, EPA is significantly cutting pollution from the hardest working vehicles on the road,” said EPA Administrator Michael S. Regan. “Building on our recently finalized rule for light- and medium-duty vehicles, EPA’s strong and durable vehicle standards respond to the urgency of the climate crisis by making deep cuts in emissions from the transportation sector.”

“EPA’s standards complement President Biden’s unprecedented investment in our workers and communities to reduce harmful emissions, while strengthening our manufacturing capacity for the transportation technologies of the future,” said President Biden’s National Climate Advisor Ali Zaidi. “By tackling pollution from heavy-duty vehicles, we can unlock extraordinary public health, climate, and economic gains.”

Trucks and other h eavy-duty vehicles are vital to the United States economy, transporting goods and freight and providing services for industry, transit, and other sectors. At the same time, heavy-duty vehicles account for 25 percent of all greenhouse gas emissions from the transportation sector, which is itself the single largest source of greenhouse gas emissions in the United States. Greenhouse gas emissions are the primary driver of climate change and its impacts, including more severe heat waves, drought, sea level rise, extreme climate and weather events, coastal flooding, and catastrophic wildfires .

“Today’s announcement demonstrates that a zero-emission heavy-duty vehicle future is not only achievable, but more essential than ever given the disproportionate rate of greenhouse gas emissions from buses and trucks,” said Senator Alex Padilla (D-CA). “This historic rule reflects California’s leadership and heeds my consistent calls to implement a strong HDV emissions rule that will transform our transportation sector and safeguard clean air for all, including for disadvantaged communities in freight corridors. I also applaud the Biden Administration for recently launching a whole-of-government strategy to deploy the zero-emission heavy-duty infrastructure needed to make this transition a success.” 1

“The American Lung Association is pleased to support the new cleaner trucks standards,” said Paul G. Billings, National Senior Vice President, Public Policy, American Lung Association. “Today’s rule will improve the air we breathe and curb the pollution that is driving climate change. This rule is the capstone of the Clean Trucks Plan. The strong standards finalized today build on the 2023 rule to address oxides of nitrogen and last week’s multipollutant rule that will clean up light-and medium-duty vehicles. The result will be cleaner air and better health, especially in communities with heavy truck traffic nearby.”

“Sierra Club is pleased that the EPA has finalized the federal heavy-duty vehicle standards, which will help cut emissions from large polluting trucks and buses,” said Katherine García, Director of the Sierra Club’s Clean Transportation for All campaign. “The new standards reflect Congress' long standing demand for healthy air along with its recent historic investments in getting cleaner vehicles on our roads, corridors, and ports. Together, they are a game changer. With the climate crisis underway and many of our communities facing unprecedented fires, droughts, and floods, it’s crucial that truck manufacturers get into the fast lane with zero-emission trucks to deliver the climate, health, and economic benefits we deserve.”

"Hip Hop Caucus is encouraged by EPA's new federal emissions standards for trucks, which will reduce the harmful air pollution that disproportionately affects Black, Brown, Indigenous and low-income communities near ports, roadways and highways,” said Russell Armstrong, Senior Director of Campaigns and Advocacy at the Hip Hop Caucus. “This is a meaningful step in the right direction. We will continue to work with EPA to make sure that clean vehicles are accessible and affordable for all.”

Heavy-Duty Vehicle Greenhouse Gas Standards

Today’s “Phase 3” standards build on EPA’s Heavy-Duty Phase 2 program from 2016 and maintain that program’s flexible structure, which is designed to reflect the diverse nature of the heavy-duty vehicle industry. The standards are technology-neutral and performance-based, allowing each manufacturer to choose what set of emissions control technologies is best suited for them and the needs of their customers. Available technologies include advanced internal combustion engine vehicles, hybrid vehicles, plug-in hybrid electric vehicles, battery electric vehicles, and hydrogen fuel cell vehicles. These new standards apply to heavy-duty vocational vehicles (such as delivery trucks, refuse haulers, public utility trucks, and transit, shuttle, and school buses) and tractors (such as day cabs and sleeper cabs on tractor-trailer trucks).

Relative to the proposal, EPA’s final rule provides more time in the early model years of the program for the development of vehicle technologies and deployment of charging and refueling infrastructure. The final rule also includes flexibilities that will assist manufacturers in meeting the standards in the early years of the program while preserving incentives for early adoption of advanced technologies.

EPA received extensive feedback on the proposed rule, including over 175,000 public comments, testimony at public hearings, and engagement with stakeholder groups. The final standards were informed by the best available data and information in the public record and rigorous technical assessments, including consideration of the extensive public input EPA received in response to the proposed rulemaking. 

Prioritizing Public Health and Climate Benefits

Pollution from heavy-duty vehicles contributes to climate change and can exacerbate serious health issues such as respiratory and heart ailments, especially for the 72 million people in the United States who live close to truck freight routes and are more likely to be people of color or come from low-income households. Today’s final heavy-duty greenhouse gas standards complete EPA’s Clean Trucks Plan for reducing greenhouse gas emissions and other harmful air pollutants (including nitrogen oxides (NO x ), particulate matter (PM), and air toxics) from heavy-duty vehicles through a series of rulemakings. These rules include today’s standards as well as (1) EPA’s recently finalized light- and medium-duty vehicle multipollutant standards for MY 2027-2032 (which covers Class 2b and 3 trucks), and (2) EPA’s December 2022 rule to control smog- and soot-forming emissions from heavy-duty engines and vehicles. The Clean Trucks Plan represents the most protective set of EPA regulations ever for the on-road sector, significantly reducing pollution, protecting public health, and responding to the urgency of climate change.

Savings and Customer Choice

There is a wide variety of trucks and other heavy-duty vehicles on the road, serving a diverse array of needs and customers. Today’s standards recognize the diversity of vehicle types and encourage further innovations in clean vehicle technology, enhancing options at the dealership that will also save customers, owners, and operators money through reduced fuel and maintenance costs. Under these new standards, the heavy-duty industry is expected to realize annualized savings of $3.5 billion compared to annualized costs of about $1.1 billion from 2027 through 2055.

After accounting for the vehicle purchase tax credits provided under President Biden’s Inflation Reduction Act, the typical buyer of new clean technology vocational vehicles and day cabs in 2032 when the standards are fully phased in will save money on the upfront cost of the vehicles and recoup any additional costs, such as the purchase and installation of vehicle charging equipment, in two to four years. The typical buyer of new clean technology sleeper cab will recoup the upfront cost of a vehicle in five years. A purchaser of a heavy-duty truck in 2032 – when the standards are fully phased in – could save between $3,700 and $10,500 on fuel and maintenance costs annually, depending on vehicle type.

Working with Stakeholders Throughout Phase 3 Implementation

EPA’s analysis finds that heavy-duty vehicle technologies, charging and refueling infrastructure, and supply chains will be available to support the final standards. At the same time, EPA has committed to actively monitor and track the technologies the heavy-duty vehicle manufacturers are developing and deploying, and the deployment of heavy-duty vehicle electric charging and hydrogen fueling infrastructure in order to ensure the successful implementation of the Phase 3 program.

EPA will consult with a wide range of stakeholders on an ongoing basis to learn from their experiences and gather relevant information and data. These stakeholders will include, at a minimum, trucking fleets and trucking trade associations; heavy-duty vehicle owner-operators; heavy-duty vehicle manufacturers; investor-owned utilities, public utilities, and electricity cooperatives; infrastructure providers and installers; state and local governments, communities with environmental justice concerns; and environmental and public health NGOs. In consultation with other agencies, beginning as early as 2026, EPA will issue periodic reports reflecting the collected information throughout the lead-up to and during the implementation of the Phase 3 standards. Based on these reports, the agency may decide to issue guidance documents, initiate a future rulemaking to consider modifications to the Phase 3 rule, or make no changes to the program.

In parallel to the Phase 3 rule, the Joint Office of Energy and Transportation and the Department of Energy, in collaboration with the Department of Transportation and the Environmental Protection Agency, recently announced the first-ever National Zero Emission Freight Corridor Strategy, an all-of-government action plan for deploying a world-class zero-emission freight network across the nation by 2040. The Strategy prioritizes high-traffic routes and freight hubs to catalyze four phases of public and private investment in heavy-duty zero-emission transportation, with a focus on reducing harmful emissions for the most affected communities.

Investing in America’s Clean Transportation Future  

The final standards align with and support the commitments and billions of dollars’ worth of investments from trucking fleets, vehicle manufacturers, and vehicle technology firms as they plan to increase the use or production of clean vehicle technologies in trucking and other heavy-duty fleets. These investments are resulting in a range of technologies with the potential for further significant reductions of greenhouse gas emissions from heavy-duty motor vehicles.

EPA recently announced the launch of the $3 billion Clean Ports Program to help tackle emissions from heavy-duty vehicles both in and out of U.S. port communities. Along with EPA’s long-standing Diesel Emissions Reduction Act (DERA) program which reduces harmful emissions from diesel engines , the new Bipartisan Infrastructure Law Clean School Bus Program, and an upcoming clean heavy-duty program to fund the replacement of existing Class 6 or Class 7 vehicles with clean technology vehicles, we are making changes in communities now to reduce emissions from the heavy-duty fleet. Together, these programs are offering billions of dollars in funding to replace older vehicles and engines with clean vehicle technology options.

As the EPA finalizes the rule, the Biden-Harris Administration is also investing funds in communities across America from the Bipartisan Infrastructure Law to promote clean transportation, including building a national network of EV chargers and alternative-fuel stations; ensuring domestic manufacturers have the materials they need to make EV batteries; and funding clean transit and clean school buses, with priority for underserved communities. In addition, funding through the Inflation Reduction Act will directly support the clean-vehicle transition through support for domestic battery manufacturing and clean vehicle purchases for owners, operators, and businesses.

For more information on the Phase 3 Final Rulemaking, please visit EPA’s Final Rule: Greenhouse Gas Emissions Standards for Heavy-Duty Vehicles – Phase 3 website . 

Here’s what other leaders are saying about the final rule:

Sean Waters, Vice President Product Integrity for Daimler Truck North America: “We thank the agency for addressing industry concern about the challenges of the early years of the rule and we remain committed to upholding the spirit of this regulation.  At Daimler Truck North America, it is our aspiration to offer only carbon-neutral new vehicles in the U.S. by 2039 and our comprehensive product portfolio of state-of-the-art trucks will ensure our customers can transition to greener transportation on the road ahead.  Ultimately, the successful transition of the commercial vehicle industry is dependent on the availability of reliable zero emission charging and refueling infrastructure and the ability to conduct business at a reasonable cost of ownership.  We appreciate the regulation’s recognition of this fact and look forward to working with the EPA as well as federal and state governments to deliver both.”

Senator Tom Carper (D-DE), Chairman of the Senate Environment and Public Works Committee: “Curbing emissions from heavy-duty vehicles is a win-win for the planet and public health. It supports the United States in reaching President Biden’s ambitious climate goals while cleaning up the air we breathe. Today’s rule will be especially critical for disadvantaged communities located near freight corridors that are overburdened by air pollution, as well as the millions of children who are currently riding dirty diesel buses to school each day. I commend the EPA for their continued work to build a clean transportation future for America.”

Representative Pete Aguilar (CA-33): “I am glad to see that the EPA’s new emission standards will drastically lower carbon emissions, reducing smog and pollution in the Inland Empire. Not only does this rule make crucial progress in combatting climate change, but it will also contribute to better health outcomes in our community and create more jobs in the clean energy sector. I look forward to working with the EPA on implementing these standards in our community and advocating in Congress for more clean energy solutions.”

Cynthia Williams, Global Director for Sustainability, Ford Motor Company : “The EPA’s new heavy-duty emissions rule is challenging, but Ford is working aggressively to meet the moment. Our industry is making important progress to reduce greenhouse gas emissions in both light- and heavy-duty vehicles. We also need policymakers to pair emission standards with incentives and public investment so that we can continue to deliver on the next generation of vehicles and for our nation to lead the future of this industry.”            

Neha Palmer, CEO and Co-Founder, Terawatt : “Fleet charging solutions providers like Terawatt are proud to be investing billions into infrastructure that supports electrification at scale. We look forward to continue working with fleets incorporating EVs to ensure that charging is available as trucks continue to hit the road — and initiatives that get EVs closer to cost parity with ICE vehicles are crucial. These standards, combined with the National Zero Emission Freight Strategy released earlier this month, gives the industry a coordinated pathway towards accelerated uptake of zero-emission vehicles."

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1 Added in additional quote.