The Financial Crimes Enforcement Network has issued a notice of proposed rulemaking to establish a pilot program for financial institutions to share suspicious activity reports with their foreign branches, subsidiaries, and affiliates.
The limited-duration pilot program would expand the sharing of suspicious activity reports (SARs) from previous guidance, which stated the reports may only be shared internally with foreign head offices, controlling companies and domestic affiliates.
According to FinCEN, it expects the pilot program to provide feedback as considers long-term approaches towards SAR sharing with foreign affiliates.
The notice of proposed rulemaking will seek comments on establishing the pilot program, including input on the expected costs and benefits, technical challenges, the merits of quarterly reporting and how to protect SAR confidentiality. Comments will be due on March 28.
“ABA has long supported SAR information sharing between banks, and we look forward to working with FinCEN and our members to help make the new pilot program a success,” the American Bankers Association said.
“Although important steps must be taken to maintain SAR confidentiality, we believe the program will make it easier and more efficient to fight fraud and illicit finance while allowing banks to better manage enterprise-wide risk.”
Under the Bank Secrecy Act (BSA), financial institutions are required to file SARs when activity by customers, counterparties or employees meets a set of pre-established criteria.
Specifically, these are criminal violations involving insider abuse in any amount; criminal violations aggregating $5,000 or more when a suspect can be identified; criminal violations aggregating $25,000 or more regardless of a potential suspect; and transactions conducted or attempted by, at, or through a covered financial institution (or an affiliate) and aggregating $5,000 or more, if the bank or affiliate knows, suspects, or has reason to suspect the transaction.
In November 2020, the impact of SARs disclosures on financial institutions sent shockwaves through the industry, after leaked SARs were released to media organisations.
SARs are intended to be confidential however, BuzzFeed and the International Consortium of Investigative Journalists received access to SARs which revealed deficiencies within law enforcement as well as within individual banks.
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