Important Exception to BSA Rule EXPIRES

by Mary Beth Guard, BOL Guru

On July 1, 2004, the CIF exception to the BSA travel rule expired. Financial institutions must now fully comply with the travel rule requirements, with no CIF exception. Here's the scoop:

31 CFR 103.33(g) embodies the so-called "Travel Rule" which requires a financial institution to include certain information in transmittal orders relating to transmittals of funds of $3,000 or more. The information must "travel" with the order throughout the funds transmittal sequence. (Thus, the name "Travel Rule".)

When this part of the BSA regulation was originally adopted in 1995, the banking industry voiced concern over the part of the requirement that a customer's true name and address be included in a funds transmittal order. Institutions indicated to FinCEN that computer software programs would need to be modified before this information could be included using automated customer information files (CIFs) because the information was often programmed with coded or nominee names and address, and sometimes used post office boxes.

FinCEN took the hardship complaints to heart. As a result, a CIF Exception was created to allow institutions adequate time to complete the necessary reprogramming tasks. The exception relaxed the requirement that the customer's true name and address be included, providing that it was permissible instead for the institution to take alternate steps described in FinCEN Issuance 98-1.

This exception was intended to be temporary, and was originally set to expire on May 31, 1999. The expiration date was later extended, first to 2001, then to May 31, 2003, then to December 1, 2003, and finally to July 1, 2004. This time, the expiration is truly final.

Most small institutions reportedly got themselves in a position to comply with the Travel Rule. Since the CIF exception has now expired, it's time to make sure you are in compliance.

[Note: In the Federal Register notice (see below) of the expiration of the conditional exception, FinCEN includes an interpretation permitting the continued use of a customer's mailing address (rather than the customer's physical street address) for the purposes of the Travel Rule only, provided that the transmittor's true address is maintained on file and can be retrieved upon request by law enforcement. The address used may not, however, be that of the financial institution.]

More info (Federal Register notice of the expiration of the conditional exception)

Updated on BankersOnline.com 7/13/05