Money Laundering, Terrorism and Financial Institutions - USA Patriot Act Monitor

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6/10/2009 FinCEN Proposals Would Apply CTR and Recordkeeping Rules to Mutual Funds

The Financial Crimes Enforcement Network is proposing to add mutual funds to the basic list of financial institutions in 31 CFR 103.11(n). Mutual funds are already listed as financial institutions in the Code, so the proposed regulatory change is largely to bring mutual funds under currency transaction reporting requirements (and taking them out of the requirement for filing Form 8300), as well as subjecting mutual funds to requirements on the creation and retention of records for extensions of credit and cross-border transfers of currency, monetary instruments, checks, investment securities, and credit. These requirements apply to transactions in amounts exceeding $10,000. The change may be in part due to some red flags that FinCEN has recently noted. The preamble discusses the CTR change in detail, and describes how the Travel Rule on funds transmittals would apply to mutual funds. FinCEN seeks comments on a number of aspects to its proposal. The proposal will be analyzed in detail in the July issue of the Monitor.

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