Improving its relationship with industry continues to be a focus of the Financial Crimes Enforcement Network, FinCEN’s Deputy Director Jamal El-Hindi recently remarked. Speaking at the ABA/ABA Money Laundering Enforcement Conference in Washington, D.C., on Nov. 14, 2016, El-Hindi highlighted FinCEN’s efforts to "engage with industry on more targeted efforts to identify and take action with respect to illicit activity."
Information sharing. "Financial intelligence is most effective when information flows in both directions between the public and private sectors," said El-Hindi. Using Section 314(a) of the USA PATRIOT Act, FinCEN and financial institutions are able to share information with one another related to money laundering and terrorist financing. The average 314(a) request identifies "roughly 10 new accounts and 50 new transactions, and leads to 10 follow-up requests from law enforcement to financial institutions."
In addition, Section 314(b) provides a safe harbor from liability that would otherwise arise because of the disclosure of certain customer information between financial institutions that encourages voluntary information sharing. El-Hindi noted that 314(b) information sharing can be a "potent tool" when countering money laundering schemes that use multiple financial institutions.
FinCEN also uses public, and non-public, geographic targeting orders to learn more about specific money laundering schemes. For example, a GTO brought FinCEN "valuable information" about the use of high-end residential real estate in money laundering.
"In both of these contexts—the use of GTOs and our targeted 314(a) efforts—we have taken the time to discuss and clarify our objectives with industry at various stages in development and implementation; this helps us ensure that our industry partners understand the context for our actions," said El-Hindi. "Just as important, we follow through on our engagement with them to show them how valuable their efforts are."
Use of advisories. Another way FinCEN engages with industry is through the use of advisories and guidance. El-Hindi highlighted two recent advisories: an advisory that raised awareness among financial institutions about the intersection between cyber and anti-money laundering/counter-terrorist financing issues, and an advisory on e-mail compromise fraud schemes that defined a variety of e-mail fraud schemes and provided red flags. El-Hindi noted that the advisories were well received and accessed "hundreds of thousands of times within their first months of issuance."
Regulating industry. El-Hindi also touched on the internal conversations that accompany rulemakings. Recalling an idea from his training program for law enforcement and regulators at the Kennedy School that regulators tend to under-regulate for fear of over-regulating, El-Hindi remarked that when combating money laundering and other bad actors, "it is important for us to use our authorities fully."
However, El-Hindi stated that FinCEN’s regulatory actions are not entered into lightly: "For each effort that I described, we went through several cautionary discussions of ‘what ifs.’"
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