FRK_20220517_omb

Supporting Statement for the
Recordkeeping Requirements of Regulation H and Regulation K Associated with the
Procedures for Monitoring Bank Secrecy Act Compliance
(FR K; OMB No. 7100-0310)
Summary
The Board of Governors of the Federal Reserve System (Board), under authority
delegated by the Office of Management and Budget (OMB), has extended for three years,
without revision, the Recordkeeping Requirements of Regulation H and Regulation K Associated
with the Procedures for Monitoring Bank Secrecy Act Compliance (FR K; OMB No.
7100-0310). Section 208.63 of the Board’s Regulation H - Membership of State Banking
Institutions in the Federal Reserve System (12 CFR Part 208) requires state member banks to
establish and maintain in writing procedures reasonably designed to ensure and monitor
compliance with the provisions of the Bank Secrecy Act (BSA)1 and its implementing
regulations. Sections 211.5(m)(1) and 211.24(j)(1) of the Board’s Regulation K - International
Banking Operations (12 CFR Part 211) impose those same requirements on Edge and agreement
corporations and, except for a federal branch or a federal agency 2 or a state branch that is insured
by the Federal Deposit Insurance Corporation (FDIC), the U.S. branches, agencies, and
representative offices of foreign banks supervised by the Board.
The estimated total annual burden for the FR K is 3,640 hours.
Background and Justification
The BSA and its implementing regulations require financial institutions to keep records
and make reports “where they have a high degree of usefulness in criminal, tax, or regulatory
investigations or proceedings, or in the conduct of intelligence or counterintelligence activities,
including analysis, to protect against international terrorism.”3 Pursuant to the Anti-Drug Abuse
Act of 1986, the federal banking agencies are required to (1) prescribe regulations requiring the
institutions they regulate to establish and maintain procedures reasonably designed to assure and
monitor compliance with the BSA and (2) to review such procedures during the course of their
examinations. 4 The federal banking agencies have jointly issued regulations to require that the
insured depository institutions they regulate establish and maintain procedures to assure and
monitor compliance with the requirements of the BSA and the implementing regulations
promulgated thereunder by the Secretary of the Treasury. 5 These rules incorporate the minimum
components of a BSA compliance program, as determined by the federal banking agencies, and
as generally set forth in the BSA. 6 The Board’s regulations, which apply to state member banks,
1

See 31 U.S.C. § 5311 et seq.
The terms “federal agency” and “federal branch” have the same meanings as in section 1 of the International
Banking Act of 1978 (12 U.S.C. § 3101). See 12 CFR 211.21.
3
See 31 U.S.C. § 5311.
4
Pub. L. No. 99-570, § 1359 (1986). The Federal banking agencies are the Board, FDIC, and Office of the
Comptroller of the Currency (OCC). 12 U.S.C. § 1813(q).
5
Procedures for Monitoring Bank Secrecy Act Compliance, 52 FR 2858 (January 27, 1987). The rule was issued by
the Board, FDIC, OCC, Federal Home Loan Bank Board, and National Credit Union Administration.
6
See 31 U.S.C. § 5318(h).
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are codified at section 208.63 of Regulation H. In 2006, Regulation K was revised to add
corresponding provisions for Edge and agreement corporations, and, except for a federal branch
or a federal agency or a state branch that is insured by the FDIC, the U.S. branches, agencies,
and representative offices of foreign banks supervised by the Board. 7 This information is not
available from other sources.
Description of Information Collection
The BSA compliance program requirements of Regulation K and Regulation H require
respondent institutions to establish a written BSA compliance program that includes the
following components: (1) a system of internal controls to assure ongoing compliance,
(2) independent testing of compliance by the institution’s personnel or by an outside party,
(3) the designation of an individual or individuals responsible for coordinating and monitoring
day-to-day compliance, and (4) training for appropriate personnel.8 The compliance program
must be approved by the board of directors of the state member bank, Edge corporation, or
agreement corporation, and the approval must be noted in the institution’s minutes. In the case of
a branch, agency, or representative office of a foreign bank, the compliance program may be
approved by the foreign bank’s board of directors and noted in the minutes or approved by a
delegee acting under the express authority of the foreign bank’s board of directors.
Respondent Panel
The FR K panel comprises state member banks; Edge and agreement corporations; and
U.S. branches, agencies, and representative offices of foreign banks supervised by the Board ,
except for a federal branch or a federal agency or a state branch that is insured by the FDIC.
Time Schedule for Information Collection
This information collection consists of recordkeeping requirements. The creation of a
BSA compliance program is a mandatory one-time requirement. Subsequent changes to the
program would be on occasion. This ongoing recordkeeping requirement is necessary for
enforcement of the BSA and its implementing regulations.
Public Availability of Data
No data collected by this information collection is published.

7

See 71 FR 13934 (March 20, 2006). Regulations H and K also require that certain financial institutions implement
a customer identification program (CIP). The information collection associated with the CIP for institutions subject
to this requirement is cleared by the Financial Crimes Enforcement Network. See Customer Identification Programs
for Banks (OMB No. 1506-0026).
8
See 12 CFR 208.63(c); these specific requirements are incorporated by reference in 12 CFR 211.5(m)(1) and
211.24(j)(1).

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Legal Status
The FR K is authorized pursuant to section 8(s) of the Federal Deposit Insurance Act
(FDIA), which requires the federal banking agencies, including the Board, to (1) prescribe
regulations requiring the institutions they regulate to establish and maintain procedures
reasonably designed to assure and monitor compliance with the BSA and (2) to review such
procedures during the course of their examinations (12 U.S.C. § 1818(s)).9 The FR K is
mandatory.
Because the records required by the FR K will be retained at banking organizations, the
Freedom of Information Act (FOIA) would only be implicated if the Board’s examiners obtained
a copy of the records as part of the examination or supervision of a banking institution. In that
case, the records would be exempt from disclosure under exemption 8 of the FOIA, which
protects examination materials from disclosure (5 U.S.C. § 552(b)(8)). To the extent that
information retained in response to the FR K constitutes nonpublic commercial or financial
information, which is both customarily and actually treated as private by the respondent, it may
also be kept confidential under exemption 4 of the FOIA (5 U.S.C. § 552(b)(4)). Exemption 4
protects “trade secrets and commercial or financial information obtained from a person [that is]
privileged or confidential.”
Consultation Outside the Agency
There has been no consultation outside the agency.
Public Comments
On December 10, 2021, the Board published an initial notice in the Federal Register (86
FR 70496) requesting public comment for 60 days on the extension, without revision, of the
FR K. The comment period for this notice expired on February 8, 2022. The Board did not
receive any comments. The Board adopted the extension, without revision, of the FR K as
originally proposed. On April 6, 2022, the Board published a final notice in the Federal Register
(87 FR 19932).
Estimate of Respondent Burden
As shown in the table below, the estimated total annual burden for the FR K is 3,640
hours. The Board estimates that it takes each respondent 16 hours to create its BSA compliance
program and 4 hours to maintain procedures to assure and monitor compliance with the BSA.
Since the measures taken to comply with Regulations H and K are consistent with sound risk
management and banking practices, the Board believes that little additional burden is associated
with the requirements for establishing and maintaining a compliance program. These
recordkeeping requirements represent less than 1 percent of the Board’s total paperwork burden.
9

Section 8(s) of the FDIA authorizes the Board to prescribe regulations covering the entities required to comply
with section 208.63 of the Board’s Regulation H (12 CFR 208.63) and sections 211.5(m)(1) and 211.24(j)(1) of the
Board’s Regulation K (12 CFR 211.5(m)(1) and 12 CFR 211.24(j)(1). See 12 U.S.C. §§ 1813(c)(3), 1818(b)(3), and
1818(b)(4).

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Estimated
number of
respondents10

FR K
Establish compliance program
Maintenance of compliance
program

Annual
frequency

Estimated
average hours
per response

1 11

1

16

16

906 12

1

4

3,624

Total

Estimated
annual burden
hours

3,640

The estimated total annual cost to the public for the FR K is $220,038.13
Sensitive Questions
This collection of information contains no questions of a sensitive nature, as defined by
OMB guidelines.
Estimate of Cost to the Federal Reserve System
Since the Federal Reserve does not collect any information in connection with the FR K,
the estimated cost to the Federal Reserve System is negligible.

10

Of these respondents, 442 are considered small entities as defined by the Small Business Administration (i.e.,
entities with less than $600 million in total assets), https://www.sba.gov/document/support--table-size-standards.
There are no special accommodations given to mitigate the burden on small institutions.
11
This number represents the average number of state member banks, Edge and agreement corporations, and foreign
banks operating U.S. branches, agencies, and representative offices supervised by the Board that were established
each year from 2018 through 2020.
12
This number represents the actual number of state member banks, Edge and agreement corporations, and foreign
banks operating U.S. branches, agencies, and representative offices supervised by the Board that are open and active
as of December 31, 2020.
13
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 $21, 45% Financial Managers at
$74, 15% Lawyers at $71, and 10% Chief Executives at $102). 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 2021, published March 31, 2022, https://www.bls.gov/news.release/ocwage.t01.htm. Occupations are
defined using the BLS Standard Occupational Classification System, https://www.bls.gov/soc/.

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