FR2064_20150819_omb

Supporting Statement for the
Recordkeeping Requirements Associated with Changes in Foreign Investments
(Made Pursuant to Regulation K) (FR 2064; OMB No. 7100-0109)
Summary
The Board of Governors of the Federal Reserve System, under delegated authority from
the Office of Management and Budget (OMB), proposes to extend for three years, without
revision, the mandatory Recordkeeping Requirements Associated with Changes in Foreign
Investments (Made Pursuant to Regulation K) (FR 2064; OMB No. 7100-0109). Internationally
active U.S banking organizations (member banks, Edge Act and agreement corporations, and
bank holding companies) are required to maintain adequate internal records that demonstrate
compliance with the investment provisions contained in Subpart A of International Banking
Operations (Regulation K).1 There is no formal reporting form for this recordkeeping
requirement. The estimated annual burden for this recordkeeping requirement is 160 hours.
Background and Justification
Effective September 1, 2001, the Federal Reserve eliminated the collection of the
FR 2064 reporting form, and replaced it with a recordkeeping requirement. This recordkeeping
requirement is used to fulfill the Federal Reserve’s supervisory responsibilities and monitor
compliance with relevant sections of the Federal Reserve Act (FRA) and Regulation K. The
recordkeeping requirement allows the Federal Reserve to monitor compliance with the general
consent provisions of Regulation K.2 Monitoring the level of international investments is
necessary in order to ensure compliance with relevant banking laws and regulations, and to
ensure that banking organizations do not expose themselves to undue risk.
Although the FR 2064 reporting form has been eliminated, the Federal Reserve has a
continuing need to monitor compliance with the FRA and sections 211.8 through 211.10 of
Regulation K. Organizational structure information previously collected in the FR 2064 report is
now being collected through the Report of Changes in Organizational Structure (FR Y-10; OMB
No. 7100-0297) and the Annual Report of Holding Companies (FR Y-6; OMB No. 7100-0297).
Banking organizations must maintain records for other information previously collected on the
FR 2064 as detailed in the SR Letter 02-2 published February 7, 2002. Internationally active
U.S. banking organizations are also expected to maintain adequate internal records to allow
examiners to review compliance with the investment provisions of Regulation K.
Description of Information Collection
For each investment made under Subpart A of Regulation K, internal records should be
maintained regarding the type of investment, for example, equity (voting shares, nonvoting
1

See Letter SR 02-2 published February 7, 2002.
The Board has granted its general consent to U.S. banking organizations to make foreign investments without
prior notice to the Board if the investment meets certain criteria. The criteria relate to the dollar amount of the
investment, whether the investment is in a subsidiary or a joint venture, or is a portfolio investment, and whether the
investor is a bank holding company, a member bank, or an Edge Act or agreement corporation.
2

shares, partnerships, interests conferring ownership rights, participating loans), binding
commitments, capital contributions, and subordinated debt; the amount of the investment; the
percentage ownership; activities conducted by the company and the legal authority for such
activities; and whether the investment was made under general consent, prior notice, or specific
consent authority. With respect to investments made under general consent authority,
information also must be maintained that demonstrates compliance with the various limits set out
in section 211.9 of Regulation K.
Time Schedule for Information Collection
This recordkeeping information maintained by the banking organization should be made
available to the Federal Reserve during the course of on-site examinations and pursuant to other
supervisory requests. At this time, the Federal Reserve does not require that such information be
maintained in a specific format.
Legal Status
The Board’s Legal Division has determined that the legal authority to require
recordkeeping of this information is set forth in section 5(c) of the BHC Act (12 U.S.C. §
1844(c)); sections 7 and 13(a) of the International Banking Act of 1978 (12 U.S.C. § 3105 and
3108(a)); section 25 of the FRA (12 U.S.C. § 601-604a); section 25A of the FRA (12 U.S.C. §
611-631); and Regulation K (12 C.F.R. § 211.8(c) - 211.10(a)). The recordkeeping requirements
are mandatory. Since the Federal Reserve does not collect any records, no issue of
confidentiality under the Freedom of Information Act (FOIA) arises. FOIA will only be
implicated if the Board’s examiners retain a copy of the records in their examination or
supervision of the institution, and would be exempt from disclosure pursuant to FOIA (5 U.S.C.
§ 552(b)(4), (b)(6), and (b)(8)).
Consultation Outside the Agency
On April 14, 2015, the Federal Reserve published a notice in the Federal Register
(80 FR 19986) requesting public comment for 60 days on the extension, without revision, of the
FR 2064. The comment period for this notice expired on June 15, 2015. The Federal Reserve
did not receive any comments. On June 29, 2015, the Federal Reserve published a final notice in
the Federal Register (80 FR 36991) for the FR 2064.
Estimate of Respondent Burden
The Federal Reserve estimates the annual burden hours for the FR 2064 to be 160 hours.
The Federal Reserve estimates that the effort associated with the recordkeeping requirements
will take an average of two hours per quarter. The recordkeeping burden represents less than 1
percent of total Federal Reserve System annual paperwork burden.

2

FR 2064

Number of
respondents3

Annual
frequency

Estimated
average hours
per response

Estimated
annual
burden hours

20

4

2

160

The total annual cost to the public is estimated to be $8,280.4
Sensitive Questions
There are no questions of a sensitive nature in this report, as defined by OMB guidelines.
Estimate of Cost to the Federal Reserve System
Since the Federal Reserve does not collect any information the related cost to the system
is negligible.

3

Of these respondents, none are estimated to be small entities as defined by the Small Business Administration (i.e.,
entities with less than $550 million in total assets) www.sba.gov/content/table-small-business-size-standards.
4
Total cost to the public was estimated using the following formula: percent of staff time, multiplied by annual
burden hours, multiplied by hourly rates (30% Office & Administrative Support at $17, 45% Financial Managers at
$63, 15% Lawyers at $64, and 10% Chief Executives at $87). Hourly rates for each occupational group are the
(rounded) mean hourly wages from the Bureau of Labor and Statistics (BLS), Occupational Employment and Wages
May 2014, published March 25, 2015, www.bls.gov/news.release/ocwage.t01.htm. Occupations are defined using
the BLS Occupational Classification System, www.bls.gov/soc/.

3