FinCEN has issued a Notice of Proposed Rulemaking that would define mutual funds as “financial institutions” under rules implementing the Bank Secrecy Act (BSA). As such, mutual funds would become subject to rules requiring the filing of currency transaction reports (CTRs) and the creation, retention, and transmittal of records or information on transmittals of funds and other specified transactions.
Mutual funds currently file reports on IRS/FinCEN Form 8300 for the receipt of more than $10,000 in currency. The proposal would instead require funds to file CTRs on FinCEN Form 104. Both forms document a transaction in currency over $10,000, but differ in some technical respects.
One notable difference between the forms is the definition of “currency.” Both forms define “currency” to include cash, but Form 8300 also defines “currency” to include certain monetary instruments such as cashier’s checks, bank drafts, traveler’s checks, and money orders with a face amount of $10,000 or less. By moving to the CTR filing requirement, mutual funds would no longer have to report transactions involving such instruments
The proposal also would subject mutual funds to the Travel Rule and related recordkeeping requirements in 31 CFR 103.33. The Travel Rule requires a financial institution to obtain and retain certain information relating to transmittal of funds of $3,000 or more, and that this information be passed along to other financial institutions in the payment chain. The amount and type of information a financial institution must obtain, retain, and/or transmit depends upon its role in the funds transfer process. Additionally, mutual funds would be required to create and retain records for extensions of credit and cross-border transfers of currency, monetary instruments, checks, investment securities, and credit.
The rule proposal is available at www.FinCEN.gov. The comment period expires on September 3, 2009.