The Department of the Treasury has primary responsibility for implementing and enforcing the BSA. The Secretary of the Treasury delegated the authority to administer the BSA to the Director of the Financial Crimes Enforcement Network (FinCEN) in 31 CFR 1010.810(b)(8), Enforcement, and Treasury Order 180-01, 67 FR 64697. FinCEN further delegated the responsibility to examine and assure compliance with the requirements of 31 CFR Chapter X, Financial Crimes Enforcement Network, Department of the Treasury, for certain entities to the IRS in 31 CFR 1010.810(b)(8).

31 CFR 1010.810(b)(8) delegates authority to the Commissioner of Internal Revenue to examine all financial institutions, except brokers or dealers in securities, mutual funds, futures commission merchants, introducing brokers in commodities, and commodity trading advisors, not currently examined by Federal bank supervisory agencies for soundness and safety.

FinCEN’s delegation of authority to conduct Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business, examinations under Title 31 enables the IRS to share the results of such examination with FinCEN and other federal and state governmental agencies, without Title 26 disclosure issues. IRS retains penalty authority for all Form 8300 filing requirements under Title 26.

Director, Examination – Specialty Policy is the executive responsible for BSA Examination policy and procedures.

Director, Examination – Specialty Examination is the executive responsible for BSA examination operational compliance.

Chief, BSA is responsible for ensuring general information about basic BSA examiner responsibilities and IRM sections is communicated to and carried out by BSA examiners.

The Title 31 database contains reports to monitor the current year’s work plan, as well as specific programs. These reports provide Headquarters and Field Examination with timely and reliable information. Reports used to monitor examination processes include:

Periodic program reviews are conducted to:

The following table is a list of acronyms, and their definitions, used in this IRM:

The following table lists terms, and their definitions, used in this IRM.

The following is a list of resources related to the information found in this IRM.

The BSA required the filing of reports designed to create a paper trail for currency transactions. The principal reports required were:

The requirements for these reports and records were initially challenged as an unconstitutional infringement of privacy rights; however, judicial decisions established BSA's constitutionality.

United States v. Deak Perera & Co., 566 F. Supp. 1398 (D.D.C. 1983), held that examiners are prohibited from conducting tax examinations under the guise of a BSA examination. The lower court case prohibits examiners from expanding the scope and depth of a BSA examination for the sole purpose of securing information for tax purposes only.

Congress expanded the civil and criminal penalties.

Treasury issued regulations detailing the circumstances under which a "geographic targeting order" could be issued. A geographic targeting order (GTO) is an order that imposes additional recordkeeping and/or reporting requirements on one or more domestic financial institutions or nonfinancial trades or businesses in a geographic area.

Congress directed Treasury to research the uses made of BSA reports because of the millions of CTRs being filed, mostly by banks, on legitimate business activities. Legislative focus shifted from reporting all transactions to reducing, through exemptions, the number of CTRs filed.

Legislation was passed which required the reporting of suspicious transactions by banks.

Laws were passed to specifically address money laundering by and through nonbank financial institutions (NBFIs).

FinCEN amended the regulations to include certain gaming establishments, commonly called "card clubs" , "card rooms" , "gaming clubs" , or "gaming rooms" within the definition of financial institution effective August 1, 1998

The Financial Crimes Enforcement Network (FinCEN) published the final rule requiring money services businesses (MSBs) to register with the Department of the Treasury and to maintain a current list of their agents for examination, on request, by any appropriate law enforcement agency. The law became effective as of September 21, 1999; however, registering was not required prior to December 31, 2001. More emphasis was placed on requiring financial institutions to retain records.

The September 11, 2001 terrorist attacks in the U.S. led to intense Congressional interest in terrorist financing. President George W. Bush signed into law the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT Act) Act of 2001, Public Law No.107-56, on October 26, 2001. The law:

The American Jobs Creation Act of 2004, Public Law No. 108-357, increased the amount of civil penalties that could be assessed for violation of the FBAR requirements. This amendment also established a new FBAR penalty for nonwillful violations. The law is effective for violations occurring after October 22, 2004.

FinCEN issued the final regulations requiring:

Regulations addressing the USA PATRIOT Act’s requirements were issued:

FinCEN issued guidance on September 22, 2006 to assist MSBs in understanding the regulatory requirements regarding conducting independent reviews of their anti-money laundering programs. The guidance addresses four areas:

Treasury reorganized, renumbered, and reissued the BSA regulations to 31 CFR Chapter X, Financial Crimes Enforcement Network, Department of the Treasury, Parts 1000-1099, from 31 CFR Part 103, Financial Recordkeeping and Reporting of Currency and Foreign Transactions, effective on March 1, 2011. See Exhibit 4.26.5-1 for the 31 CFR Chapter X, General Cross-Reference Index. See IRM 4.26.5.1.6 for a link to the full text of the regulations.

FinCEN’s updating of the definitions of money services businesses (MSBs) reflects past guidance and rulings, current business operations, evolving technologies, and merging lines of business. The final rule also separates the provisions dealing with stored value from those dealing with issuers, sellers, and redeemers of traveler’s checks and money orders. The updated definitions became effective on September 19, 2011. See 31 CFR 1010.100(ff), Money Service Business, which includes:

FinCEN added language to 31 CFR 1022.380, Registration of money services businesses, to ensure foreign-located MSBs have the same reporting, recordkeeping and other requirements as MSBs with a physical presence in the US, with respect to their activities in the US. Foreign-located MSBs will be subject to the same civil and criminal penalties as MSBs with a physical presence in the US, with respect to their failure to comply with regulatory requirements. Foreign-located MSBs are required to designate the name and address of a person who resides in the US and is authorized, and has agreed, to be an agent to accept service of legal process with respect to compliance with the BSA and to identify the address of the location within the U.S. where the registration will be retained.

The Credit Card Accountability, Responsibility and Disclosure Act of 2009 mandated regulation of prepaid access providers. FinCEN issued definitions of prepaid access providers and sellers (31 CFR 1010.100(ff)(4), Provider of prepaid access, and 31 CFR 1010.100(ff)(7), Seller of prepaid access, and required providers to register as MSBs effective September 27, 2011. Both providers and sellers are required to have AML programs under 31 CFR 1022.210(d)(1)(iv) and maintain additional records under 31 CFR 1022.420, Additional records to be maintained by providers and sellers of prepaid access. FinCEN provided additional clarification by means of "Frequently Asked Questions" on November 2, 2011 and again on March 24, 2016.

FinCEN published expanded regulations for the Report of Foreign Bank and Financial Accounts (FBAR) effective on March 28, 2011 at 31 CFR 1010.350, Reports of foreign financial accounts. The instructions to the FBAR Form, TD F 90-22.1, were also revised.

FinCEN developed the BSA E-Filing System and mandated electronic filing (e-filing) of most forms effective July 1, 2012. Suspicious Activity Reports, Currency Transaction Reports, Designations of Exempt Persons, and Registrations for Money Services Businesses were required to be e-filed. Mandatory e-filing of the FBAR form was exempted until June 30, 2013.

FinCEN issued the final rule defining non-bank Residential Mortgage Lenders and Originators (RMLOs) as loan or finance companies which required them to establish anti-money laundering (AML) programs and report suspicious activity under the BSA. RMLOs were required to develop and implement an AML program by August 13, 2012 and file SARs on transactions occuring after this date under regulations at 31 CFR 1029, Rules for Loan or Finance Companies. Any transactions involving the receipt of coin or currency over $10,000 will continue to be subject to reporting on Form 8300.

The requirement for criminal court clerks to file Form 8300 under the BSA became effective on December 23, 2011.

FinCEN issued interpretive guidance, FIN-2013-G001, on March 18, 2013 to clarify the applicability of the regulations to persons creating, obtaining, distributing, exchanging, accepting, or transmitting virtual currencies. The guidance makes it clear that an administrator or exchanger is an MSB under the regulations, specifically, a money transmitter, unless a limitation to or exemption from the definition applies to the person. Currency is defined as the coin and paper money of the US or of any other country that is designated as legal tender and that circulates and is customarily used and accepted as a medium of exchange in the country of issuance. Virtual currency does not have legal tender status in any jurisdiction. The guidance addresses "convertible" virtual currency as it has an equivalent value in real currency or acts as a substitute for real currency. For further information, see IRM 4.26.9, Examination Techniques for Bank Secrecy Act Industries.

FinCEN issued administrative ruling, FIN-2014-R003, Records to be Made and Maintained by Dealers in Foreign Exchange, on March 11, 2014 to clarify circumstances in which a dealer in foreign exchange may accept alternative travel documents as identification for a non-resident alien. FinCEN authorized the following exception to the requirements of 31 CFR 1022.410(b)(3) for dealers in foreign exchange verifying the identity of non-resident aliens:

The IRS, with concurrence of the Financial Crimes Enforcement Network (FinCEN), rendered TD 15-41 obsolete when it was cancelled as of June 5, 2017. This same authority is conveyed in The USA Patriot Act, Bank Secrecy Act Regulations, and memoranda of agreement between FinCEN and the IRS.

FinCEN issued interpretive guidance on May 9, 2019 to remind persons subject to the BSA how regulations relating to MSBs apply to certain business models involving money transmission denominated in value that substitutes for currency, specifically, convertible virtual currencies (CVCs). The guidance is intended to help financial institutions comply with their existing obligations under the BSA as they relate to current and emerging business models involving CVC by describing FinCEN’s existing regulatory approach to the issues most frequently raised by industry, law enforcement, and other regulatory bodies within this evolving financial environment. In this regard, it covers only certain business models and necessarily does not address every potential combination of facts and circumstances. Thus, a person working with a business model not specifically included in this guidance may still have BSA obligations.

Financial institutions as defined in 31 CFR 1010.100(t), Financial institution, include:

31 CFR 1010.100(ff) defines a money services business as a person wherever located, doing business, whether on a regular basis or as an organized or licensed business concern, wholly or in substantial part within the United States, in one or more of the capacities listed below under "Types of Money Services Businesses" . This includes but is not limited to maintenance of any agent, agency, branch, or office within the United States.

A MSB does not include:

A dealer in foreign exchange is a person that accepts the currency, or other monetary instruments, funds, or other instruments denominated in the currency, of one or more other countries in an amount greater than $1,000 for any other person on any day in one or more transactions, whether or not for same day delivery. (31CFR 1010.100(ff)(1))

A check casher is a person that accepts checks (as defined in the Uniform Commercial Code), or monetary instruments (as defined at section 31 CFR 1010.100(dd)(1), Monetary instruments) in return for currency or a combination of currency and other monetary instruments or other instruments, in an amount greater than $1,000 for any person on any day in one or more transactions. (31 CFR 1010.100(ff)(2)) There are several exclusions:

An issuer or seller of traveler’s checks or money orders is a person that (i) issues traveler’s checks or money orders that are sold in an amount greater than $1,000 to any person on any day in one or more transactions; or (ii) sells traveler’s checks or money orders in an amount greater than $1,000 to any person on any day in one or more transactions. (31CFR 1010.100(ff)(3))

A provider of prepaid access is the participant within a prepaid program that agrees to serve as the principal conduit for access to information from its fellow program participants. The participants in each prepaid access program must determine a single participant within the prepaid program to serve as the provider of prepaid access. Until this is done, the provider is the person with principal oversight and control over the prepaid program. (31 CFR 1010.100(ff)(4)) Prepaid access does not include:

A seller of prepaid access is a person that receives funds or the value of funds in exchange for loading of prepaid access if that person:

A money transmitter is a person that provides money transmission services. The term "money transmission services" means the acceptance of currency, funds, or other value that substitutes for currency from one person and the transmission of currency, funds, or other value that substitutes for currency to another location or person by any means. "Any means" includes, but is not limited to, through a financial agency or institution; a Federal Reserve Bank or other facility of one or more Federal Reserve Banks, the Board of Governors of the Federal Reserve System, or both; an electronic funds transfer network; or an informal value transfer system; or any other person engaged in the transfer of funds. (31 CFR 1010.100(ff)(5))

Whether a person is a money transmitter as described in this section is a matter of facts and circumstances. (31 CFR 1010.100(ff)(5)(B)(ii)) The term money transmitter shall not include a person that only;

The US Postal Service except for the sale of postage or philatelic products. (31 CFR 1010.100(ff)(6))

A person is defined as an individual, a corporation, a partnership, a trust or estate, a joint stock company, an association, a syndicate, joint venture, or other unincorporated organization or group, an Indian Tribe (as that term is defined in the Indian Gaming Regulatory Act), and all entities cognizable as legal personalities at 31 CFR 1010.100(mm), Person.

The definition of financial institution under 31 CFR 1010.100, General definitions, also includes each agent, agency, branch, or office within the United States of any person doing business, whether on a regular basis or as an organized business concern, in one or more of the capacities listed at 31 CFR 1010.100(t), Financial institution, and identified above at IRM 4.26.5.4.1. Each is separately required to follow the reporting and recordkeeping requirements of the BSA.

Where the reports to be filed or records to be kept would be duplicates, only one report is required to be filed. This means that the principal office with branch locations can determine who files the report and where the records will be retained. Each is separately responsible if the requirements of the law are not met.

If a Licensed Money Transmitter (LMT) or its agent has knowledge that multiple currency transactions have been conducted by or on behalf of one person in an amount over $10,000 during any one business day, a CTR must be filed reflecting these aggregated transactions. Simply stated, a CTR must be filed for these aggregated transactions as well as for any single currency transaction by or on behalf of one person in an amount greater than $10,000 in one business day. Because of the computer system involved in these types of transactions, both the LMT and their agent are considered as having knowledge of the currency transactions and a CTR would be required by both financial institutions involved in the transaction.

FinCEN specifically states that both financial institutions are technically required to file a CTR; however, to avoid unnecessary duplicative reporting, FinCEN requires that only one report be filed with respect to the same transaction. This is evidenced in FinCEN Ruling 2001-1, Currency Transaction Reporting: Completing a CTR and Aggregation. To reduce the number of CTRs on the same transaction, FinCEN's policy is that a LMT and their agents may engage in a contractual agreement as to which one will file the CTR. The overall factor is that there is no harm to the Government related to these contractual agreements if one CTR is being filed on the transaction.

If a required CTR is not filed, both financial institutions are liable for a violation of the BSA. The contractual agreement does not relieve either financial institution for the failure to file the CTR. See FinCEN Ruling 2003-3, Currency Transaction Reporting: Transactions between Money Transmitters and their Agents.

A nonfinancial trade or business that receives more than $10,000 in coin or currency in a single transaction (or two or more related transactions) is required under the BSA to file a Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business, under 31 USC 5331, Reports relating to coins and currency received in nonfinancial trade or business, as well as under IRC 6050I, Returns relating to cash received in a trade or business. Form 8300 reflects this dual statutory purpose in its heading. A primary purpose of enacting 31 USC 5331 was to free the Form 8300 information from the disclosure protections applicable to information returns required by the IRC. A nonfinancial trade or business is defined in section 31 USC 5312(a)(4), Nonfinacial Trade or Business, to mean any trade or business other than a financial institution that is subject to the reporting requirements of 31 USC 5331, and regulations prescribed under such section, such as the BSA.

There is one significant difference between the two statutes. There is no requirement under 31 USC 5331 that the filer provide the annual written or electronic statement to each person named on the Form 8300.

Other differences between the two statutes arise because supporting sections were not changed in the BSA. For example:

For a detailed discussion of Form 8300 law, see IRM 4.26.10, Form 8300 History and Law.

Individual owners, officers, or employees of the financial institution act on behalf of the financial institution. The knowledge, intent, or negligence of these individuals may be attributed to the financial institution. The individuals themselves are separately liable as individuals for additional penalties for willful violations. Examples of individual responsibility include:

Individuals as well as financial institutions are also directly required to report:

As of April 1, 2013, FinCEN mandated the use of the new single reporting Form 112, Currency Transaction Report. The report replaced FinCEN Form 104, Currency Transaction Report (CTR), and FinCEN Form 103, Currency Transaction Reports by Casinos. The new CTR form did not create any new obligations or otherwise change existing statutory and regulatory expectations of financial institutions.

Financial institutions electronically file the CTR to report currency (cash or coin) transactions over $10,000 conducted by, or on behalf of, one person, as well as multiple currency transactions that aggregate to be over $10,000 in a single day. A financial institution is required to file a report of each deposit, withdrawal, exchange of currency, or other payment or transfer, by, through, or to such financial institution involving more than $10,000 in currency. Only cash transactions that, if alone or when aggregated, exceed $10,000 should be reported on the CTR. Transactions are not offset against one another. If there are both "Cash In" and "Cash Out" transactions that are reportable, the amounts should be considered separately and not aggregated. However, they may be reported on a single CTR. If there is a currency exchange, it should be aggregated separately with each of the "Cash In" and "Cash Out" totals.

Before concluding any transaction with respect to which a CTR is required, a financial institution is required to verify and record the name and address of the individual conducting the transaction, as well as record the identity, account number, and the social security or taxpayer identification number, if any, of any person or entity on whose behalf such transaction is to be affected. See 31 CFR 1010.312, Identification required.

When completing the CTR, as with any FinCEN report, financial institutions should complete those items for which they have relevant information, regardless of whether or not individual items are deemed critical for technical filing purposes. See FIN-2012-G002, Filing FinCEN's new Currency Transaction Report and Suspicious Activity Report, issued on March 29, 2012.

Banks, including credit unions, are not required to file CTRs on transactions with certain entities and are allowed, at the discretion of the bank, to exempt certain types of business transactions. See 31 CFR 1020.315, Transactions of exempt persons.

Under the regulations, banks are not required to file a report with:

Banks may exempt, to the extent of its domestic operations, customers who are either non-listed businesses that regularly withdraw or deposit more than $10,000 or payroll customers that regularly withdraw more than $10,000 to meet payroll. Most NBFIs cannot be exempted by the bank. See 31 CFR 1020.315(e)(8), Ineligible businesses.

Three requirements must be met for this exemption. FinCEN issued revised guidance, FIN-2012-G003, Determining Eligibility for Exemption from CTR requirements, on June 11, 2012. The entity must have:

At least once a year, a bank must review the eligibility of an exempt person to determine whether such person remains eligible for an exemption. As part of its annual review, a bank must review the monitoring system on each existing account of an exempt person to ensure "exempting" the customer still meets eligibility requirements.

Banks must apply special exemption rules to NBFIs. See 31 CFR 1020.315(e)(8), Ineligible businesses.

The Designation of Exempt Person, FinCEN Form 110, must be filed by any bank that wishes to designate a customer as an exempt person for purposes of CTR reporting, 31 CFR 1020.315(c), Designation of certain exempt persons. Effective July 1, 2012, this form must be filed through FinCEN’s BSA E-Filing System.

Reporting a revocation of exemption is not mandatory.

The CTR exemption provision does not relieve a bank from its obligation to file Suspicious Activity Reports.

An NBFI must file a CTR on reportable transaction regardless of the customer involved.

A NBFI is not required to file CTRs with respect to a transaction in currency between the institution and a commercial bank. See CFR 1010.315, Exemption for non-bank financial institutions. A bank is defined as a commercial bank or trust company organized under the laws of any State or of the United States. See 31 CFR 1010.100(d)(1), Bank. NBFIs that conduct currency transactions with foreign banks must file CTRs on an appropriate transaction.

A CTR is not required to be filed by either the agent or their Licensed Money Transmitter (LMT) when a transfer of currency takes place between the agent and the LMT, so long as the transfer is conducted within the scope of the agency relationship (the relationship by which the agent is authorized by the LMT to sell the LMT’s money transmission services to customers). Therefore, neither the LMT nor its agent would be required to file a CTR to report the transfer of cash between them. FinCEN Ruling 2003-3, Currency Transaction Reporting: Transactions between Money Transmitters and their Agents.

The BSA requires persons who transport currency or monetary instruments into or out of the United States to file a report. The report is filed by the person who moves the funds into or out of the United States.

FinCEN Form 105, Report of International Transportation of Currency or Monetary Instruments (CMIR), is examined by Customs, not the IRS. It must be filed by:

The CMIR can be downloaded from the FinCEN web site by selecting Resources, then Filing Information. Because the form is physically filed by persons crossing U.S. borders, it is exempted from the e-filing mandate. CMIR definitions:

FinCEN Form 114, The Report of Foreign Bank and Financial Accounts (FBAR), is filed by a United States person that has a financial interest in or signature authority over foreign financial accounts when the aggregate value of the foreign financial accounts exceeds $10,000 at any time during the calendar year. The FBAR is the only BSA form for which IRS has the delegated authority to assess penalties as well as to examine. FBAR law is outlined in IRM 4.26.16, Report of Foreign Bank and Financial Accounts (FBAR), and the relevant procedures are discussed in IRM 4.26.17, Report of Foreign Bank and Financial Accounts (FBAR) Procedures.

The electronic version of the FBAR is downloadable from the IRS Document Repository searching for Catalog # 12996D or on the FinCEN web site under Resources, then Filing Information. Filing electronically on FinCEN’s BSA E-Filing system was required effective July 1, 2013.

Most financial institutions are required to file Suspicious Activity Reports (SARs). Such forms require information about the reporting financial institution, the financial institution(s) where the transaction(s) took place, the person(s) conducting the transaction, the person or business the transactions are being conducted on behalf of, the suspicious activity, the person or business the transactions is being conducted on behalf of, and the person to contact for assistance.

As of April 1, 2013, FinCEN mandated the use of the new single reporting Suspicious Activity Report (SAR), FinCEN Form 111. The report replaced all industry-specific SARs. The new SAR form did not create any new obligations or otherwise change existing statutory and regulatory expectations of financial institutions.

Prior Suspicious Activity Reports, listed below, are hereinafter referred to as "legacy reports" .

FinCEN mandated electronic filing of the SAR through the BSA E-Filing System beginning July 1, 2012.

Form 8300Report of Cash Payments Over $10,000 Received in a Trade or Business, may be used voluntarily by any trade or business to report suspicious activity by checking the Suspicious Transaction box at the top of the form. There is no filing threshold if the filing is suspicious.

Nonfinancial trades or business with BSA requirements for filing suspicious activity reports, such as insurance companies, are required to file a SAR. Checking the Suspicious Transaction box on the Form 8300 is not a substitute for filing a BSA required SAR. The entity must still file a SAR.

SAR filing requirements by financial institution:

Currency Transaction Reports, including legacy reports, must be retained for five years from the date of filing the report. See 31 CFR 1010.306(a)(2) , Filing of reports.

Suspicious Activity Reports, including legacy reports, and supporting documentation must be retained for five years from the date of filing the report. These regulations for retaining a SAR include:

There is no report retention period in the regulations for the CMIR or the FBAR reports, although certain records underlying the FBAR must be maintained for five years, 31 CFR 1010.420, Records to be made and retained by persons having financial interests in foreign financial accounts.

Reports required for geographic targeting orders are retained for the period set forth in the order not to exceed five years. See 31 CFR 1010.430(d), Nature of records and retention period.

Copies of Forms 8300 are also required to be retained for five years. See 26 CFR 1-6050I-1(e)(3)(iii), Retention of returns.

Registration must be renewed every two calendar years beginning with the first calendar year in which the MSB is required to register. The form must be filed on or before the last day of the calendar year preceding the next two-year renewal period. The same filing and retention rules for the MSB registration form apply to the renewal.

MSBs are required to re-register with FinCEN if one of the following events occur:

The FinCEN Form 107 must be filed not later than 180 days after such event. The calendar year in which the change, transfer, or increase occurs is treated as the first year of a new two-year registration period. See 31 CFR 1022.380(b)(4), Events requiring re-registration.

A MSB must prepare and maintain a list of its agents. The initial agent list must be prepared by the due date of the initial registration form and must be revised each January 1 for the immediately preceding 12-month period. The list is not filed with the registration form but must be maintained at the location in the United States reported on the registration form. The original list of agents and any revised list must be retained for five years as specified in 31 CFR 1010.430(d), Nature of records and retention period.

The agent list must include the information specified in 31 CFR 1022.380(d)(2), Information included on the list of agents:

31 CFR 1010.430(d), Nature of records and retention periods, is the overall authority for record retention. Generally, records must be retained for five years from the date of the transaction. This five-year period is reaffirmed in sections 31 CFR 1010.420, Records to be made and retained by persons having financial interests in foreign financial accounts, and 31 CFR 1010.415, Purchases of bank checks and drafts, cashier's checks, money orders and traveler's checks, for foreign financial account records maintained by persons and for issuers and agents of money orders, travelers’ checks, and similar instruments. Records required under a targeting order are maintained according to the terms of the order. The five-year record retention for suspicious activity reports and supporting documentation is found in the regulations that establish a Suspicious Activity Reporting requirement.

Failure to retain records is a recordkeeping violation for penalty application purposes.