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Disclaimer: The contents of this article are intended to provide a general understanding of the subject matter. However, this article is not intended to provide legal or other professional advice, and should not be relied on as such. From the basics of what types of transactions fall under the Rule, to mandatory versus optional data requirements, to its many exemptions — as well as the nuances addressed by subsequent FinCEN guidance not contained in the Rule itself — compliance professionals need to understand the details of this longstanding Bank Secrecy Act BSA regulation.
This article begins with a review of the fundamentals of the FinCEN Travel Rule , and why compliance is so important to anti-money laundering efforts. Learn about the nuances of complying with the Travel Rule, including a discussion of pending changes to the Travel Rule in an October Notice of Proposed Rulemaking; Fedwire versus Travel Rule requirements; aggregated funds transfers; Originator name issues; and transfers by non-customers.
In January , the Board of Governors of the Federal Reserve and FinCEN jointly issued a Rule for banks and other nonbank financial institutions, relating to information required to be included in funds transfers. The Recordkeeping Rule and the Travel Rule are complementary. The Recordkeeping Rule does however serve other purposes besides ensuring that information is available to include with funds transfers.
The distinction between these two terms is simple: a bank performs transfers, and a non-bank financial institution performs transmittals. Fund transfers have been the tool of choice for money laundering, fraud, and much more, for decades. In other words, it helps them follow the money. The Recordkeeping and Travel Rule states that it applies to funds transfers. The definition of a funds transfer is very important, as highlighted later in the discussion of the most recent Notice of Proposed Rulemaking.