Rules and Regulations. Notice, request for comment

Agency: Board of Governors of the Federal Reserve System
Action: Notice, request for comment
Citation: FR Doc. 2019-10246

Summary

The Board of Governors of the Federal Reserve System (Board) invites comment on a proposal to extend for three years, without revision, the Reporting, Recordkeeping, and Disclosure Requirements Associated with Regulation NN (FR NN; OMB No. 7100-0353).

Dates

Comments must be submitted on or before July 16, 2019.

Supplementary Information

On June 15, 1984, OMB delegated to the Board authority under the PRA to approve and assign OMB control numbers to collection of information requests and requirements conducted or sponsored by the Board. In exercising this delegated authority, the Board is directed to take every reasonable step to solicit comment. In determining whether to approve a collection of information, the Board will consider all comments received from the public and other agencies. Request for Comment on Information Collection Proposal The Board invites public comment on the following information collection, which is being reviewed under authority delegated by the OMB under the PRA. Comments are invited on the following: a. Whether the proposed collection of information is necessary for the proper performance of the Board's functions, including whether the information has practical utility; b. The accuracy of the Board's estimate of the burden of the proposed information collection, including the validity of the methodology and assumptions used; c. Ways to enhance the quality, utility, and clarity of the information to be collected; d. Ways to minimize the burden of information collection on respondents, including through the use of automated collection techniques or other forms of information technology; and e. Estimates of capital or startup costs and costs of operation, maintenance, and purchase of services to provide information. At the end of the comment period, the comments and recommendations received will be analyzed to determine the extent to which the Board should modify the proposal. Proposal Under OMB Delegated Authority To Extend For Three Years, Without Revision, the Following Information Collection Report title: Reporting, Recordkeeping, and Disclosure Requirements Associated with Regulation NN. Agency form number: FR NN. OMB control number: 7100-0353. Frequency: Event generated. Respondents: Banking institutions. Estimated number of respondents: Reporting: 1; recordkeeping: 2; disclosure: 2. Estimated average hours per response: Reporting: 16; recordkeeping: 183; disclosure: 787. Estimated annual burden hours: 1,956. General description of report: Regulation NN includes certain reporting, recordkeeping, and disclosure requirements for banking institutions that elect to provide foreign currency exchange services to retail consumers. The regulation applies to state member banks, uninsured state-licensed branches of foreign banks, financial holding companies, bank holding companies, savings and loan holding companies, agreement corporations, and Edge Act corporations (collectively, “banking institutions”) that engage in retail foreign exchange transactions. Legal authorization and confidentiality: The reporting, recordkeeping, and disclosure requirements in Regulation NN are authorized pursuant to section 2(c)(2)(E) of the Commodity Exchange Act (“CEA”), 7 U.S.C. 2(c)(2)(E). Section 2(c)(2)(E) of the CEA prohibits a United States financial institution and its related persons under the supervision of a Federal regulatory agency, such as the Board, from offering or entering into certain types of foreign exchange transactions with retail customers except pursuant to a rule or regulation prescribed by the appropriate Federal regulatory agency allowing the transaction under such terms and conditions as the Federal regulatory agency shall prescribe. Regulation NN's reporting requirement (12 CFR 240.4), recordkeeping requirements (12 CFR 240.7, 240.9(b)(2), and 240.13(a)) and disclosure requirements (240.5(a), 240.6, 240.7, 240.9(b)(2), 240.10, 240.13(a) & (c)-(d), 240.15, and 240.16(a) and (b)) are mandatory for banking institutions that engage in retail foreign exchange transactions. The reporting requirement under section 240.4 of Regulation NN requires a banking institution to provide a prior written notice to the Board that includes information concerning customer due diligence; the policies and procedures for haircuts to be applied to noncash margin; information concerning new product approvals; and information on addressing conflicts of interest. The disclosure of this information is reasonably likely to result in substantial competitive harm to the banking institution, and therefore, may be kept confidential under exemption (b)(4) of the Freedom of Information Act (“FOIA”), which protects “trade secrets and commercial or financial information obtained from a person [that is] privileged or confidential” (5 U.S.C. 552(b)(4)). In addition, the prior written notice must also include a resolution of the banking institution's board of directors certifying that the institution has written policies, procedures, and risk measurement and management systems and controls in place to ensure retail foreign exchange transactions are conducted in a safe and sound manner and in compliance with Regulation NN. Generally, this resolution by the board of directors would not be accorded confidential treatment. If confidential treatment is requested by a banking institution, the Board will review the request to determine if confidential treatment is appropriate. The recordkeeping and disclosures required under sections 240.5(a), 240.6, 240.7, 240.9(b)(2), 240.10, 240.13(a) & (c)-(d), 240.15, and 240.16(a) and (b) of Regulation NN generally are not submitted to the Board. Accordingly, no confidentiality issues will normally arise under the FOIA. In the event such records or disclosures are obtained by the Federal Reserve through the examination or enforcement process, such information may be kept confidential under exemption 8 of the FOIA, which protects information contained in or related to an examination of a financial institution (5 U.S.C. 552(b)(8)). Board of Governors of the Federal Reserve System, May 14, 2019. Michele Taylor Fennell, Assistant Secretary of the Board. [FR Doc. 2019-10246 Filed 5-16-19; 8:45 am]