Banking and Finance Law Daily FinCEN clarifies BSA enforcement
Tuesday, August 18, 2020

FinCEN clarifies BSA enforcement

By John M. Pachkowski, J.D.

As the primary regulator and administrator of the BSA, FinCEN has issued a statement that sets forth its approach to enforcing the rules and regulations within the BSA.

The Financial Crimes Enforcement Network has released a statement setting forth its approach to enforcing the rules and regulations within the Bank Secrecy Act (BSA).

Earlier, the federal financial regulatory agencies—Office of the Comptroller of the Currency, Federal Reserve Board, and Federal Deposit Insurance Corporation—released a joint statement to clarify how the agencies apply the BSA enforcement provisions and related anti-money laundering (AML) laws and regulations (see Banking and Finance Law Daily, Aug. 14, 2020).

Clarity and transparency. The aim of the FinCEN statement is to provide clarity and transparency to the agency’s approach when contemplating compliance or enforcement actions against covered financial institutions that violate the BSA. For purposes of the BSA, the term "financial institution" encompasses a wide variety of institutions, including banks, broker-dealers in securities, money services businesses, and casinos and card clubs, among others. FinCEN is also responsible for prescribing rules of conduct for nonfinancial trades and businesses and individuals, such as dealers in precious metals, precious stones, or jewels.

Factors considered. The statement also outlines the range of administrative actions available to FinCEN, such as warning letters, settlements, civil money penalties, and criminal referrals. Finally, the statement provides an illustrative list of factors that FinCEN analyzes in order to determine the appropriate outcome to BSA violations. These factors include, among other things, the nature and seriousness of the violations; impact or harm of the violations on FinCEN’s mission to safeguard the financial system; history of similar violations; and whether another agency took enforcement action for related activity.

Not a "gotcha" game. Commenting on the agency’s statement, FinCEN Director Kenneth A. Blanco said, "FinCEN is committed to being transparent about its approach to BSA enforcement. It is not a ‘gotcha’ game." He added, "The information required by the BSA saves lives, and protects our communities and people from harm. It is a national security issue."

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