On January 24, 2022, the Financial Crimes Enforcement Network (“FinCEN”) published a Notice of Proposed Rulemaking (“NPRM”). FinCEN is proposing a rule to establish a pilot program that permits certain financial institutions to share Suspicious Activity Reports (“SARs”) in alignment with Section 6212(a) of the Anti-Money Laundering Act of 2020 (“AML Act”).
The Proposed Rule
This proposed rule would add a new section at 31 C.F.R. section 1010.240, which would enact a pilot program permitting financial institutions with SARs reporting obligations to share SARs and SARs information with its foreign branches, subsidiaries, and affiliates for the purpose of combating illicit finance risks. According to FinCEN, this proposed rule ensures that federal and state law enforcement mechanisms would limit the sharing of SARs and information related to SARs. Moreover, the proposed role considers the intelligence community’s potential concerns and would be governed by requirements and standards surrounding the confidentiality of personally identifying information and data security.
The pilot program does not apply to all foreign branches of a financial institution. Rather, the proposed rule would largely exclude the sharing of SARs and SARs information with foreign affiliates in The People’s Republic of China, the Russian Federation, and any jurisdiction that is a state sponsor of terrorism, that is subject to United States sanctions, or that the Secretary of the Treasury (the “Secretary”) has determined cannot reasonably protect the security of SARs and SARs information. A “state sponsor of terrorism” is a jurisdiction so determined by the United States Department of Justice. The Secretary may, however, make exceptions to this prohibition on a case-by-case basis by notifying the Senate Committee on Banking, Housing, and Urban Affairs and the House Committee on Financial Services that such an exception is in the United States’ national security interests.
Continue Reading Sharing is Caring: FinCEN Proposes Extending Sharing Suspicious Activity Reports to Foreign Affiliates