FinCEN and Fed withdraw plan to cut transfer threshold to $250

The Financial Crimes Enforcement Network and Federal Reserve formally withdrew a six-year-old proposal on November 9 that would have cut the recordkeeping threshold for certain cross-border funds transfers from $3,000 to $250 and expressly written convertible virtual currency into the relevant rules.

The action matters because it closes a pending route to much broader collection and transmission of customer information for international transfers. It does not repeal the existing Bank Secrecy Act rules, exempt cryptocurrency businesses from anti-money-laundering duties or prevent the agencies from proposing a new framework after another public-comment process.

What the agencies withdrew

The joint proposal, published October 27, 2020, covered banks and nonbank financial institutions. For funds transfers and transmittals that began or ended outside the United States, it would have reduced the Recordkeeping Rule threshold from $3,000 to $250. FinCEN separately proposed the same reduction for the Travel Rule, which requires information to move among financial institutions in the payment chain.

The proposal also would have amended the definitions of “payment order” and “transmittal order” to specify that the rules applied to domestic and cross-border transactions involving convertible virtual currency or digital assets treated as legal tender by a recipient.

The November 9 Federal Register notice says the agencies will take no further action on that proposal. Existing rules still generally require covered banks and nonbank financial institutions to collect, retain and transmit specified information for funds transfers and transmittals of $3,000 or more. The withdrawal therefore preserves the current threshold; it does not create a new safe harbor for transfers below that amount, which can remain subject to other monitoring, reporting and sanctions controls.

FinCEN’s 2019 guidance also remains relevant. It applies existing Bank Secrecy Act rules to money-transmission business models involving value that substitutes for currency. The withdrawn proposal would have added express regulatory text and lowered a threshold, but its demise does not erase the agency’s earlier interpretations or the fact-specific obligations of covered money transmitters.

Comments and changed conditions drove the decision

The agencies said they received nearly 3,000 comments after the 2020 proposal. They characterized commenters as generally opposed to the lower international-transfer threshold, citing concerns about compliance burdens, remittances, personally identifiable information and the volume of newly covered transactions. The notice adds that a significant majority of the submissions were substantially similar form letters, a limitation on treating the raw count as 3,000 distinct analyses.

More than five years after the proposal, FinCEN and the Fed concluded that the public should get another opportunity to comment before any similar amendments become final. They also pointed to the maturation of convertible-virtual-currency markets and emerging legal frameworks as reasons that future changes should be reconsidered rather than completed from the 2020 record.

Those explanations describe the agencies’ rationale; the notice does not quantify compliance savings, identify transaction volumes that would have been captured between $250 and $2,999.99, or estimate any effect on illicit-finance detection. No market-price or trading-volume claim is warranted from the rulemaking record.

A separate withdrawal, not a blanket rollback

The November action is distinct from FinCEN’s October 6 withdrawal of another 2020 proposal involving reporting, recordkeeping and identity verification for certain transactions with unhosted or otherwise covered wallets. Coinburn previously covered that earlier action. This week’s notice closes the separate cross-border threshold and crypto-definition proposal identified as RIN 1506-AB41.

For regulated institutions, the immediate consequence is procedural certainty: the $250 proposal will not become a final rule from its existing docket. The longer-term policy question remains open. FinCEN and the Fed explicitly left room for future amendments shaped by new market structures, legal frameworks and a fresh comment record.