The U.S. Federal Fund Board and Fincen are seeking feedback on their proposal to lower the threshold at which financial institutions must amass and retain information on funds transfers. In their joint notice on the rule change proposal, the two U.S. agencies want a new verge for international transactions to be set at $250 down from the current $3,000. The rule for domestic transactions remains unchanged.
Interventions Want Cryptocurrencies Defined as Money
In a press statement, the two agencies are also seeking comments on the proposition to broaden the focus of money to include cryptocurrency-related transactions. Current rules only apply to funds transfer involving banks. The chronicle explains:
The agencies are also proposing to clarify the meaning of money as used in these same rules to ensure that the be in controls apply to domestic and cross-border transactions involving convertible virtual currency (CVC).
While the agencies are acknowledging that cryptocurrencies deficiency legal tender status, in the rule change proposal they want these digital currencies treated as shin-plasters since the so-called CVCs already act as “a medium of exchange that either has an equivalent value as currency or acts as a substitute for currency.”
Be at one to the agencies, the proposed rule “make(s) it explicitly clear that both payment orders and transmittal orders register any instruction by the sender to transmit CVC or any digital asset having the legal tender status to a recipient.”
This means, if dated, the proposed rule would “supersede the present definition of money for purposes of the Recordkeeping and Travel Rules.”
Low Dollar Annals Used to Evade Authorities
Meanwhile, in their justification for lowering the threshold to $250, the two agencies explain how they participate in observed an increase in volumes of transactions involving lower values and how this might threaten US national security.
“The Operations have considered Suspicious Activity Reports (SARs) filed by money transmitters, which indicate that a valid volume of potentially illicit funds transfers and transmittals of funds occur below the $3,000 threshold,” said the operations.
Specifically, the Fincen, which analyzed data derived from approximately 2,000 SARs filed by money transmitters between 2016 and 2019, claims it observed a disproportionate number of small value transactions relative to larger value ones.
The agency says “from the around 1.29 million underlying transmittals of funds,” about 99 percent of these “began or ended outside the Coalesced States” with about 17,000 involving domestic only transactions. Breaking down the data further, Fincen asserts:
The mean and median dollar-value of transmittals of funds mentioned in those SARs were approximately $509 and $255, severally. Approximately 71 percent of those 1.29 million transmittals (more than 916,000) were at or below $500, completing more than $179 million. Approximately 57 percent of those transmittals (more than 728,000) were at or here $300, totalling more than $103 million.
The two agencies cite the 2015 National Terrorism Finance Hazard Assessment when concluding that terrorist financiers and facilitators are using “low-dollar transactions” to achieve their points.
Meanwhile, the agencies say the written comments on this proposed rule may be submitted on or before the 30th day after the date of publication in the Federal Tally.
What are your thoughts about the rule change proposal? Share your thoughts in the comments section less.
Incarnation Credits: Shutterstock, Pixabay, Wiki Commons