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Financial Crimes Enforcement Network (FinCEN)

FinCEN is the US regulatory watchdog that works with corporate and law enforcement entities to combat financial crime.

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The Financial Crime Enforcement Network was set up to address concerns related to financial crime in the US. It emphasises the collection and analysis of financial data held by different corporate and governmental entities to ensure national security and the strategic use of compliance regulations. Promoting integrity in the financial sector is the objective of FinCEN. 

What is FinCEN?

Established April 25, 1990, FinCEN is the financial regulatory body in the United States. It works under the US Treasury Department to combat problems arising due to the illegal flow of money. The financial intelligence unit collects transactional information from different entities and examines it to prevent money laundering and other financial crimes.  

What are the FinCEN Requirements?

FinCEN, the US financial watchdog, requires organizations and corporate entities to take appropriate measures to prevent monetary crime. Some of these requirements are listed below:

Know Your Customer:

Financial Institutions need to comply with KYC compliance regulations before associating ties with prospects. KYC standards make sure only trusted customers open accounts with a business.

Due Diligence Checks:

FinCEN requires financial institutions to perform risk assessment and Customer Due Diligence checks on their customers. Background checks and Enhanced Due Diligence (EDD) need to be done for high-risk customers.

Reporting Rules:

When a suspicious transaction or activity is detected by the financial unit of an organization, it must be reported to FinCEN through a Suspicious Activity Report (SAR). All information that FinCEN requires from financial entities must also be shared on time. 

AML Obligations:

All financial entities are obligated to comply with Anti Money Laundering rules and regulations to prevent the illicit flow of money. 

Maintaining Customer Data:

Business entities should keep records of their customer’s financial data for some time to assist FinCEN in carrying out investigations.

Sanction Rules:

FinCEN directs entities to restrict and cancel all transactions related to customers or partner entities who are sanctioned under US laws.

Background Checks:

Financial organizations need to perform ongoing AML monitoring of their customers who are listed on sanction lists including Politically Exposed Persons (PEPs) and blacklists issued by the government.  

The UBO Rule

FinCEN-defined rules and regulations on Ultimate Beneficial Ownership (UBO) are often referred to as the CDD Final Rule. This FinCEN requirement falls under the Bank Secrecy Act of 1970 that directs all financial and banking entities to carry out Customer Due Diligence procedures.  

This is a mandatory requirement from FinCEN as it is necessary to prevent criminal figures from using business platforms to obtain illegal gains. The Ultimate Beneficial Ownership (UBO) Rule is an AML compliance requirement for companies operating in the financial sector.

Responsibilities of FinCEN

The Financial Crimes Enforcement Network is responsible for enforcing regulations necessary to combat financial crime. Below are listed some responsibilities of FinCEN:

  • Ensure AML/CFT compliance within regulated entities.
  • Investigate Suspicious Activity Reports (SARs) filed by financial institutions 
  • Regulate and enforce AML/CFT regulations within the States
  • Exchange information with counterpart Financial Intelligence Units (FIUs) to support financial crime audits
  • Provide reporting requirements for companies and assist in law enforcement efforts. 
  • Analyse financial crime risks on both global and national level 

Monitor your customers AML risk profile in real-time and stay ahead of the regulatory compliance requirements.