Most travelers are familiar with the requirement to report on cash or other “monetary instruments” in their possession when they cross a U.S. international border. The Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”) proposes to add certain “tangible prepaid access” payment products s to the list of monetary instruments and “similar materials” subject to these reporting obligations. The term “tangible prepaid access device” means “any physical item that can be transported, mailed, or shipped into or out of the United States and the use of which is dedicated to obtaining access to prepaid funds or the value of funds by the possessor in any manner without regard to whom the prepaid access is issued.” Travelers would therefore be obliged to aggregate any value that can be “accessed” through such a “tangible” device for purposes of determining if they have crossed the $10,000 threshold and required to submit the relevant report (FinCEN Form 105, known as a “CMIR”). See 31 CFR § 1010.340.
As FinCEN explains in the notice of proposed rulemaking, “[t]he funds represented by prepaid access devices are payable to or readily usable by the bearer of the device, with no record necessary to track the chain of ownership. Consequently, FinCEN believes that prepaid access devices are “similar material” to the other types of “bearer instruments” that are included in the definition of “monetary instruments.” The new rule would specifically exclude debit and credit cards from the reporting requirements and is limited in scope to CMIR filing obligations.
FinCEN emphasizes that the rule is only intended to cover access devices that have “been purchased for use, loaded with funds, and ‘activated’ by whatever process a particular prepaid program requires for loaded funds to be made available for use.” Noting that prepaid access products include items such as “codes, passwords, and other intangibles,” FinCEN requests comment as to whether the rule should somehow be extended to such concepts. In addition, FinCEN asks whether the rule should be narrowed to cover only cards, or whether “cell phones, key fobs, or other tangible objects that include a device that enables them to function in a similar manner to ‘swiping’ a magnetic stripe card” should be covered. The proposed rule as drafted would appear to apply by its terms to cell phones, and FinCEN does not provide any reasoned basis for excluding them from its scope.
FinCEN’s other specific questions soliciting comments include (1) whether law enforcement will be able to identify relevant devices accurately; (2) whether closed-loop and personalized open-loop devices issued by insured depositories should be excluded; and (3) how to calculate the relevant balance for reloadable devices (maximum potential balance or actual balance at the point of the border crossing). Comments are due by December 16, 2011.
The complete Notice is available here.