FinCEN issued a final rule that defines mutual funds as “financial institutions” under rules implementing the Bank Secrecy Act (BSA). As such, mutual funds will be subject to rules under the BSA on (i) the filing currency transaction reports (CTRs) and (ii) the creation, retention and transmittal of records or information on transmittal of funds and other specified transactions (the Recordkeeping and Travel Rule).
The final rule replaces a mutual fund’s requirement to file an IRS /FinCEN Form 8300 with a requirement to file a CTR on FinCEN Form 104. Both forms document a transaction in currency over $10,000, but differ in technical respects regarding the definition of “currency” and the treatment of multiple transactions.
Mutual funds must also comply with the Recordkeeping and Travel Rule, subject to certain exceptions. The Recordkeeping and Travel Rule requires that a financial institution 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 must comply with the recordkeeping requirements relating to extensions of credit and cross-border transfers of currency, monetary instruments, checks, investment securities, and credit.
Finally, the rule harmonizes the definition of mutual fund in the AML program rule with definitions found in the other BSA rules as well as amends the rule to clarify the delegation of authority to examine institutions for BSA compliance to the SEC and not the IRS .
The CTR filing requirement becomes effective May 14, 2010. Mutual funds must comply with the Recordkeeping and Travel Rule and related recordkeeping requirements by January 10, 2011.
