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Financial Services Law Insights and Observations

FinCEN rules on currency transaction reporting

Agency Rule-Making & Guidance FinCEN Bank Secrecy Act Of Interest to Non-US Persons

Agency Rule-Making & Guidance

On February 10, the Financial Crimes Enforcement Network (FinCEN) issued administrative ruling FIN-2020-R001 to clarify requirements for financial institutions’ reporting of currency transactions involving sole proprietorships and legal entities operating under a “doing business as” (DBA) name. The ruling replaces and rescinds two prior rulings (FIN-2006-R003 and FIN-2008-R001), and addresses reporting requirements when filing current Currency Transaction Report (CTR) FinCEN Form 112. In the ruling, FinCEN defines a sole proprietorship as “a business in which one person, operating in his or her own personal capacity, owns all of the business’s assets and is responsible for all of the business’s liabilities.” To remain consistent with the Bank Secrecy Act definition of a “person” (where a sole proprietorship is not separate from its individual owner), FinCEN instructs financial institutions to complete CTR FinCEN Form 112 for transactions involving a sole proprietorship with the individual owner’s name and information. The ruling also instructs institutions that additional entries may be required in instances where an individual owner operates a business under a DBA, or multiple DBAs. FinCEN also advises that when a CTR is prepared for a legal entity such as a partnership, incorporated business, or limited liability company, the form should contain, among other things, the entity’s home office or headquarters information. According to the ruling, “[w]hen multiple entity locations are involved in an aggregated CTR, a separate Part I section should be prepared for each location involved.”