Supporting Statement
OMB Control Numbers 1506-0052
Regulations Requiring Additional Records to be Made and Retained by Dealers in Foreign Exchange (31 CFR 1022.410).
1. Circumstances necessitating collection of information.
The legislative framework generally referred to as the Bank Secrecy Act (BSA) consists of the Currency and Financial Transactions Reporting Act of 1970, as amended by the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act) (Public Law 107–56) and other legislation, including most recently the Anti-Money Laundering Act of 2020 (AML Act) (Division F of Public Law 116-283). The BSA is codified at 12 U.S.C. 1829b, 12 U.S.C. 1951–1959, 31 U.S.C. 5311–5314 and 5316–5336, and notes thereto, with implementing regulations at 31 CFR Chapter X.
The BSA authorizes the Secretary of the Treasury, inter alia, to require financial institutions to keep records and file reports that are determined to have a high degree of usefulness in criminal, tax, and regulatory matters, or in the conduct of intelligence or counter-intelligence activities to protect against international terrorism, and to implement AML programs and compliance procedures.1 Regulations implementing the BSA appear at 31 CFR Chapter X. The authority of the Secretary to administer the BSA has been delegated to the Director of FinCEN.2
31 CFR 1022.410(a) requires a dealer in foreign exchange to make and maintain a record of the taxpayer identification number of certain persons for whom a transaction account is opened or a line of credit is extended, within 30 days of opening such an account or extending such a line of credit, or longer if the person has applied for a taxpayer identification or social security number. A dealer in foreign exchange must also maintain a list containing the names, addresses, and account or credit line numbers of those persons from whom it has been unable to secure such information despite reasonable efforts.
31 CFR 1022.410(b) requires each dealer in foreign exchange to retain the original or a copy of the following: (1) statements of accounts from banks, including documents representing the entries reflected on such statements; (2) daily work records, including documents needed to identify and reconstruct currency transactions with customers and foreign banks; (3) a record of each exchange of currency involving transactions in excess of $1,000, including the customer’s name and address (and passport or tax identification number unless received by mail or common carrier), the date and amount of the transaction, and the currency name, country, and total amount of each foreign currency; (4) signature cards or other documents evidencing signature authority over each deposit or security account, containing specified items of information about the customer (including a record of the actual owner of the account if customer accounts are maintained in a code name); (5) each item, including checks, drafts, and transfers of credit, of more than $10,000 remitted or transferred to a person, account, or place outside the United States; (6) a record of each receipt of currency, other monetary instruments, investment securities and checks, and of each transfer of funds or credit, of more than $10,000 received on any one occasion directly and not through a domestic financial institution, from any person, account, or place outside the United States; (7) records prepared or received by the dealer in foreign exchange in the ordinary course of business that would be needed to reconstruct an account and trace a check in excess of $100 deposited in such an account through its internal recordkeeping system to its depository institution, or to supply a description of such a deposited check; (8) a record of the name, address and taxpayer identification number of any person presenting a certificate of deposit for payment, as well as a description of the instrument and the date of the transaction; and (9) a system of books and records that enables the dealer in foreign exchange to prepare an accurate balance sheet and income statement.
The required records must be maintained for five years.3
2. Method of collection and use of data.
The collection of information described above is not reported to the Federal government. Instead, dealers in foreign exchange are required to secure and maintain records of the taxpayer identification number for individuals for whom a transaction or brokerage account is opened, or for whom a line of credit is extended, subject to certain exceptions. The regulations also require that dealers in foreign exchange retain originals or copies of specified documents relating to account and transaction records. The recordkeeping requirements help to ensure that dealers in foreign exchange are not used to facilitate money laundering, other financial crimes, or terrorist financing. These records will be reviewed by regulatory agencies during the course of BSA examinations and made available only upon request to other appropriate agencies in accordance with applicable legal requirements.
3. Use of improved information technology to reduce burden.
Dealers in foreign exchange are permitted to automate their systems to meet their requirements. There is no specific government mandate to do so.
4. Efforts to identify duplication.
There is no similar information available; thus there is no duplication.
5. Methods to minimize burden on small businesses or other small entities.
All dealers in foreign exchange are required to secure and maintain the records described in this statement and are permitted to use the method most suitable to their requirements.
6. Consequences to the Federal government of not collecting the information.
The Federal government requires reporting of this information only upon request, in accordance with applicable legal authority.
7. Special circumstances requiring data collection inconsistent with guidelines.
Pursuant to 31 CFR 1010.430(d), all records that are required to be retained by 31 CFR Chapter X must be retained for a period of five years. Records must be kept for five years because such records may relate to substantive violations of law that are subject to statutes of limitation longer than three years.
8. Consultation with individuals outside of the agency on availability of data frequency of collection, clarity of instructions and forms, and data elements.
The 60-day notice was published on February 1, 2021.4 The notice requested public comments on the proposed renewal, without change, of currently approved information collections relating to regulations requiring additional records to be made and retained by dealers in foreign exchange and additional records to be made and retained by brokers or dealers in securities. Although no changes were proposed to the information collections themselves, the notice proposed for review and comment (a) a renewal of the portion of the Paperwork Reduction Act of 1995 (“PRA”) burden that has been subject to notice and comment in the past (the “traditional annual PRA burden”), and (b) an expansion of the scope of the PRA burden in the future (the “future annual PRA burden”). FinCEN received no comments in response to the notice.
9. Explanation of decision to provide any payment or gift to respondents.
No payments or gifts were made to respondents.
10. Assurance of confidentiality of responses.
Information retained under the regulations implementing the BSA may be made available to FinCEN and appropriate government agencies upon their request or as part of an examination.
11. Justification of sensitive questions.
This is a recordkeeping requirement. Information collection requirements for dealers in foreign exchange are mandated by other provisions of the BSA, as amended, and FinCEN regulations.
12. Estimated Annual Hourly Burden
Frequency: As required.
Estimated Number of Respondents: 923 dealers in foreign exchange. 5
Each dealer in foreign exchange must retain the original or a copy of nine types of documents as described in footnote 3. Due to the challenges of obtaining the total number of such records required to be maintained by dealers in foreign exchange under 31 CFR 1022.410, in its 2017 control number renewal, FinCEN estimated that the annual recordkeeping burden per dealer in foreign exchange for these requirements was 16 hours.6 FinCEN continues to estimate that the annual hourly burden of complying with 31 CFR 1022.410 is 16 hours per dealer in foreign exchange.
Estimated Total Annual Burden Hours: 14,768 hours (923 dealers in foreign exchange multiplied by 16 hours).
13. Estimated Annual Cost to Respondents for Hour Burdens
To calculate the hourly costs of the burden estimate, FinCEN identified three roles and corresponding staff positions involved in maintaining records as required by 31 CFR 1022.410: (i) general supervision (providing process oversight); (ii) direct supervision (reviewing operational-level work and cross-checking all or a sample of the work product against supporting documentation); and (iii) clerical work (engaging in recordkeeping).
FinCEN calculated the fully-loaded hourly wage for each of these three roles by using the median wage estimated by the U.S. Bureau of Labor Statistics (BLS),7 and computing an additional benefits cost as follows:
Role |
BLS-Code |
BLS-Name |
Median Hourly Wage |
Benefit Factor |
Fully-loaded Hourly Wage |
General supervision |
11-3031 |
Financial Manager |
$62.45 |
1.50 |
$93.68 |
Direct supervision |
13-1041 |
Compliance Officer |
$33.20 |
1.50 |
$49.80 |
Clerical work (research, review, and recordkeeping) |
43-3099 |
Financial Clerk |
$20.40 |
1.50 |
$30.60 |
FinCEN estimates that, in general and on average,8 each role would spend different amounts of time on each portion of the traditional annual PRA burden, as follows:
The cost of each hour of burden, broken down by role, to produce and maintain records as outlined in 31 CFR 1022.410 would be $37.00 as set out below:
General Supervision |
Direct Supervision |
Clerical Work |
Weighted Average Hourly Cost |
|||
% Time |
Hourly Cost |
% Time |
Hourly Cost |
% Time |
Hourly Cost |
|
5% |
$4.68 |
15% |
$7.47 |
80% |
$24.48 |
$37.00 |
$36.63 rounded to $37.00
Total Estimated Annual Cost: $546,416 (14,768 hours multiplied by $37).
There are no non-labor costs associated with this collection of information.
14. Estimated annual cost to the Federal government.
There is no cost to the Federal government; this is a recordkeeping requirement only.
15. Reason for change in burden.
The estimated total annual burden hours decreased by 22,032 hours from 36,800 hours in 2017 to 14,768 hours in 2020, although the annual hourly burden estimate for these recordkeeping requirements remained the same as in 2017. The reduction is solely a result of a decrease in the estimated number of dealers in foreign exchange from 2,300 in 2017 to 923 in 2020.
16. Plans for tabulation, statistical analysis, and publication.
This collection of information will not be published.
17. Request not to display the expiration date of the OMB control number.
FinCEN requests that it not be required to display the expiration date so that the regulations will not have to be amended for the new expiration date every three years.
18. Exceptions to the certification statement.
There are no exceptions to the certification statement.
1 Section 358 of the USA PATRIOT Act added language expanding the scope of the BSA to intelligence or counter-intelligence activities to protect against international terrorism. Section 6101 of the AML Act added language further expanding the scope of the BSA but did not disturb these longstanding purposes.
2 Treasury Order 180-01 (re-affirmed Jan. 14, 2020).
3 31 CFR 1010.430(d).
4 86 FR 7778 at https://www.federalregister.gov/documents/2021/02/01/2021-02064/agency-information-collection-activities-proposed-renewal-comment-request-renewal-without-change-of.
5 This number is derived from self-reported information in MSB registrations submitted to FinCEN. FinCEN’s MSB registration database is available at https://www.fincen.gov/msb-state-selector.
6 82 FR 31686, 31687 (July 7, 2017).
8 By “in general,” FinCEN means without regard to outliers (e.g., financial institutions with accounts or transactions that require recordkeeping that is uncommonly higher or lower than those of the population at large). By “on average,” FinCEN means the mean of the distribution of each subset of the population.
| File Type | application/vnd.openxmlformats-officedocument.wordprocessingml.document |
| File Title | Supplemental Statement |
| Author | StephR |
| File Modified | 0000-00-00 |
| File Created | 2021-08-10 |