The Financial Crimes Enforcement Network (FinCEN), the US government agency charged with enforcement of the US anti-money laundering (AML) laws, issued on September 24, 2014, an administrative ruling that was meant to clarify the application of AML regulations to currency transporters such as armored car services.
Under the regulations promulgated under the AML law often referred to as the Bank Secrecy Act (BSA), money transmitters have obligations including cash transaction reporting, recordkeeping and compliance program requirements. The definition of “money transmitter” is very broad — a person that provides money transmission services and any other person that is engaged in the transfer of funds. “Money transmission services” is the “acceptance of currency, funds, or other value that substitutes for currency from one person [“value”] and the transmission of [that value] to another location or person by any means.”
One of the exemptions to the definition of “money transmitter” is for a “currency transporter,” which is a person that is primarily engaged in the physical transportation of value from one person to the same person at a different location or to that person’s account at a financial institution, “provided that the person engaged in physical transportation has no more than a custodial interest in the currency, other monetary instruments, other commercial paper, or other value at any point during the transportation.”
The purpose of this ruling is to make it clear that not all currency transporters qualify for the exemption from the definition of money transmitter described above. As explained in the ruling the exemption only applies to a currency transporter when:
- certain federally regulated financial institutions, as well as Federal Reserve Banks, contract for and direct the physical transportation of value by the currency transporter; the exemption only applies to such physical transportation of value; and
- a currency transporter directly (without the intervention of a third party) picks up value from a person, or shipper acting at the direction of that person, and physically delivers the same value to the same person at another location or to an account of that same person at a BSA-regulated financial institution (such as a bank).
In all other scenarios, the currency transporter will be deemed to be a nonexempt money transmitter under FinCEN’s regulations and thus subject to all of the obligations applicable to money transmitters. For example, a currency transporter that picks up value from one person but delivers it to a different person unconnected with the first person, or a currency transporter that moves the same shipment from one currency transporter to another currency transporter, would be deemed to be a money transmitter.