BEFORE YOU GO...
Check how Shufti Pro can verify your customers within secondsRequest Demo
The US Financial Crimes Enforcement Network (FinCEN) issued a Notice of Proposed Rulemaking (NPRM) to set up a program for the sharing of SARs by financial institutions.
On January 25, 2022, the US FinCEN published the notice allowing financial institutions that are required to share suspicious activity reports (SARs) to share their reports themselves.
Along with the permission for financial institutions, FinCEN also requires information regarding the foreign branches, subsidiaries, and affiliates of the particular financial institution to effectively fight illicit crime risks.
Financial institutions throughout the world will be guided by the proposed pilot program as it is said to be a useful measure for managing anti-money laundering compliance systems throughout different jurisdictions.
Although the proposed pilot program is said to be temporary, it will oblige financial institutions to apply to FinCEN before they can implement it. Moreover, FinCEN has excluded some of the categories of foreign affiliates from getting SAR Information, which can possibly discourage some organizations from taking part.
FinCEN has set the deadline for conclusion of the comment period on March 28, 2022. As per the Legal Update, FinCEN’s approach is based on the following laws.
The Bank Secrecy Act (BSA), which was set forth in 1970 and amended recently by the Anti-Money Laundering Act of 2020, was meant to provide “appropriate frameworks for information sharing” within financial institutions, government authorities, and other organizations.
The BSA provides guidelines for suspicious transaction reporting, authorized the secretary of the Treasury to provide regulations, and permits the Secretary to coordinate with the director of FinCEN the authority to “take all necessary and appropriate actions to implement and administer the provisions of the [BSA].”
As per the FinCEN regulations that implement the BSA, a “financial institution is required to file a suspicious activity report if it knows, suspects, or has reason to suspect that a transaction or series of transactions conducted or attempted by, at or through the financial institution involves money laundering, BSA violations, terrorist financing, or certain other crimes.”
Suggested read: FinCEN Highlights That AML/CFT Regulation Requires Transformation to Fight Modern Crimes