Cross-border Transfers


The cross-border electronic transfer of funds, called CBETFs, is the newest type of financial transaction proposed to be regulated by the U.S. Financial Crimes Enforcement Network (FinCEN). Under proposed new regulations, FinCEN would require banks and money services businesses to report certain cross-border electronic transfers of funds.

Rationale for CBETFs

The policy change stems from Recommendation VII of the FATF Special Recommendations and the recommendations from the 9/11 Commission. FATF Special Recommendation VII recommends that countries take measures to require financial institutions to include meaningful and accurate originator information on funds transfers that are sent and monitor funds transfers that do not contain complete originator information. The 9/11 Commission found that no suspicious activity reports were ever filed in respect of the funds used to support the execution of the attacks of September 11, 2001 and that the reporting and record-keeping requirements in the Bank Secrecy Act were insufficient to deter terrorist financing. Of the US$400,000 used to execute the 9/11 attacks, US$130,000 was received in the U.S. by CBETF sent from overseas supporters.

CBETF Proposal

Under the proposed regulations, banks would have to report all CBETFs of any amount to FinCEN within five days. Money services businesses would be required to report amounts of US$1,000 or more to FinCEN. Reporting would be on a first-in and last-out basis, which means that an institution must report a transaction when it is the last financial institution to handle the transaction before it leaves the U.S. or if it is the first institution to handle it as it enters the U.S.

The proposed regulations would also require banks to annually file with FinCEN a list of the taxpayer identification numbers of its customers who sent or received a CBETF.

The regulations will also authorize the establishment of a centralized database for the collection and analysis of the cross-border data that will be used for the detection and prosecution of money laundering, terrorist financing and tax evasion offenses.