In 2010, the agency proposed making the rule much stricter, requiring institutions to keep and share records of all international wire transfers and the taxpayer identification numbers of any senders or receivers.
In December of 2010, the Independent Community Bankers of America sent a letter to the FinCEN arguing that the proposal would be an "excessive burden" on small banks.
The American Bankers Association added that the rule would be distracting to law enforcement, who would have to pore over the large reports. The industry group argued that the rule would be "an unauthorized expansion of financial reporting to government law enforcement agencies of the legal activities of law-abiding people" sending money internationally.
Regulators argued that the rule, which had its roots in a 2004 anti-terror law, would combat money laundering and the financing of terrorism and criminal activities.
“By establishing a centralized database, this regulatory plan will greatly assist law enforcement in detecting and ferreting out transnational organized crime, multinational drug cartels, terrorist financing, and international tax evasion,” then-FinCEN Director James Freis said in a statement at the time.
"Currently, the government has no ability on a national scale to systematically and proactively target money laundering, terrorist financing, tax evasion, and other financial crimes that are being conducted through wire transfers," FinCEN said in the 2010 proposal.
"By creating a reporting structure, the government will be able to query the data by geography and transaction value, uncovering linkages such as many people sending money to one person outside the United States or vice versa."
-- This report was updated at 2:31 p.m. to clarify the supplemental nature of the withdrawn proposal.