FinCEN Underestimates Community Banks’ Reporting Burden

The Independent Community Bankers of America (ICBA) has urged the Financial Crimes Enforcement Network (FinCEN) to evaluate how its rules for reporting suspicious activity impact community banks.

In a letter to FinCEN on a proposal to renew the information collection standards for suspicious activity reports without change, ICBA said the estimate of 1.98 hours per report is “grossly undervalued”.

It said FinCEN underestimates the time and resources that community banks dedicate to complying with the “cumbersome and overly burdensome”  regulations for reporting suspicious activity.

Rhonda Thomas Whitley, senior vice president and senior regulatory counsel of ICBA, said:  “These regulations also lessen community banks’ ability to attract capital, support the financial needs of their customers, serve their communities, and contribute to their local economies as many do not have dedicated legal and compliance departments.”

As a result, ICBA has urged FinCEN to take a comprehensive approach to calculating all the factors that determine the amount of time it takes to process a suspicious activity report.

It also supported a proposal to raise the suspicious activity reporting threshold to $10,000. According to ICBA, this would emphasize quality of reporting over quantity of information collection.

It would also produce more useful information for law enforcement and alleviate one of the most significant and costly sources of community bank compliance burden.

Whitley added:  “The current outdated framework is an exercise of investigating and completing forms and strictly adhering to policies and procedures developed from regulatory requirements rather than making an impact in combating financial crime.”

ICBA is the latest association to claim that FinCEN significantly underestimates the time needed for a bank to file a suspicious activity report.

The Bank Policy Institute found that banks dedicate an average of 21.41 hours to every suspicious activity report filed, which is 10 times the regulator’s estimate of 1.98 hours.