This Week in AML

FinCEN Seeks Comments on the Entire BSA

This week FinCEN issued an Request for Information and Comment (RFI) on a Review of Bank Secrecy Act Regulations and Guidance. The RFI asks for comments ways to streamline, modernize, and update the AML/CFT regime of the United States. John and Elliot discuss some key questions in the RFI and talk about the importance of making comments on this other regulatory proposals.



FinCEN Seeks Comments on the Entire BSA TRANSCRIPT


Elliot Berman: How are you today?


John Byrne: Good, Elliot? How are you doing?


Elliot Berman: I'm good too. So this week, FinCEN, in a rush to meet its year-end deadlines, sent for publication and the federal register a request for information and comment called an RFI. It's about requesting comment on, and there are 25 questions that they layout, which we'll talk about a few of them. About the overall state of, and ways to streamline, modernize and update. Those three words quote "the anti-money laundering and countering the financial terrorism regime of the United States." So the whole, the Patriot Act, I'm sorry, the Bank Secrecy Act as broadly as you can think about it. I assume you saw that.


John Byrne: I did. I know that originally just very quickly, we were going to mention this week because so many things happened last week. The update to the FFIC manual because it included a section that we've talked about before, not NGOs and charities. I just want to highlight very quickly that folks should take a look at the updates to the manual regarding that.


I think the agencies did a decent job, actually a fairly good job of sort of spelling it how to do risk assessment of charities. But the one cautionary note I would have is it still says that in certain areas around the world, charities may continue to be high risk. So again, there are a lot of mitigating factors in the guidance or in the manual, if you will.


I sort of wished that phrase wasn't in there, but in general, I thought they did a pretty good job. So when folks get a chance go to the FFIC website. Look under [the] BSA AML manual for those updates. But yeah, going back to your point, you know, one of the things that this AML law that was signed in January focused on was looking at the infrastructure in a number of different ways.


This was almost considered a catch-all. This section, section 6216, I think that, requires FinCEN a report to Congress after they do what they're calling this review of BSA regs guidance. So there's a lot of opportunities here, especially for those in our community that like to complain to be very specific about improvements, redundancies, and all sorts of things. So I obviously did see it. I think there's a great opportunity for all of us here. We definitely should take advantage.


Elliot Berman: Yes. So, there's a lot of background. There's actually a reasonably nice, concise history of the Bank Secrecy Act going all the way back to 1970. For those people who are looking, have someone new working for them who doesn't know anything about the Bank Secrecy Act, it wouldn't be bad to hand them those two pages, and at least they'd have the timeline.


But there are a set of questions. I mentioned, I think there are 25 of them, and they're broken up into a number of sections, but about safeguards to protect the financial system from threats, reports, and records that are highly useful—identifying regulations and guidance that might be outdated or do not promote a risk-based regime, which is interesting.


The risk-based issue has been one that you and I have talked about together, not necessarily on our podcasts. We've been talking about it for 20 years about, you know, whether or not it's the way the regulators actually examine insured depository institutions really allow them to do risk-based, so there's lots of opportunity to comment there.


John Byrne: Yeah. One of the things that, you know, I'm not sure how relevant it is, but certainly shows that this, treasury department and FinCEN said both respect and obviously a very well engaged with the international community through FATF. There's a section that says to identify regs and guidance, that they say, do not conform to international standards to combat financial crime.


So that's an interesting ask, frankly, and I'm curious how people will respond to that, but that certainly is an area that I hadn't seen before. It makes sense. Cause we're obviously an active member of FATF and sort of help draw the themes and the strategies there, but to take a look at it, I guess it's looking at the evaluations of us and other countries and where are there gaps in our country's laws and regs that don't, again, don't conform their words to the international standards.


Elliot Berman: Right. We actually talked about this a little bit last week that, there, in FATF's 2016 US mutual evaluation report. They did identify some significant gaps related to beneficial ownership. 


John Byrne: Right. 


Elliot Berman: But, while there was a provision in the AML act related to that, and we talked about that proposed rule a little bit last week. You know, that may or may not really bring us up to the same level as other international players in terms of the transparency of the registry and things like that. So I think it is great. I think that is a great ask. It is a recognition of the fact that this is a transnational problem. And just because the US Congress or the US regulators have decided something, that doesn't mean that's the only way, the best way, or that we're always leading the way in this compliance area.


John Byrne: Right. And, you know, FinCEN also asks for comments on regulations and guidance that don't support cost-effective compliance with BSA, but also that doesn't produce highly useful information for law enforcement. So while law enforcement rightly wants all the information, you sort of wonder things like what I would call it, no SAR, which, you know, again, documenting why you didn't file, which seems highly always. It seemed highly bizarre to me, but also things that really rankle me, that's the quote 90-day rule "that every 90 days you should have to continue to file." Sorry, the activity hasn't ceased, which again is not a requirement that just came out of thin air, frankly. So things like that. 


I think there's a chance for us to talk about that. Also, upfront, one of the things that's been consistent with, again, this treasury and, frankly, the last treasury. The heads of agencies, technology, how's technology, innovation, that sort of thing potentially have changed any of these requirements to make them either more efficient or to get rid of them.

So I think you get a chance for the people with tech backgrounds to talk about AI and some of the other stuff.


Elliot Berman: Right. So, we said it last week, actually, but well, I think it's worth saying again, you and I both view the comment process as an opportunity, ideally not to be wasted that, really expressing thoughtful and clear insights from the field to help regulators, shape policy is really important. The comment period is open until February 14th. So, 60 days. So, if you have thoughts on any of these issues, we would urge you to write them down and send them in. Here's a chance.


John Byrne: A lot easier nowadays to file comments. You just do it right online. Federal register has made it really easy, or the system has made it really easy, and you could see what other people have said too. So maybe you want to build off of what others have said in terms of commenting. That was something you didn't have the ability to do years ago.

And you can do that now. So that could even make your particular comments even stronger. When you see someone else made a similar point, and you want to build off of that.


Elliot Berman: Right. So as we wrap up here, I'm going to do the shameless plug for our next webinar, which is January 27th. We'll be talking about how analytics can help your financial crimes compliance program. John, I'll let you do the one about podcasts.


John Byrne: So, just in terms of podcasts that we mentioned last week, I was able to sit down with Chief Jim Lee from IRS. This week we are posting another conversation we've had that's on the Women in AML site.


A brand new staffer working for us, Judith Barendse, I think you'll find her background really interesting. There are also some other ones on there that we've posted in the past couple of months. If you have people that you'd like us to interview or topics or themes, reach out to Elliot and the team, or send me an email, we are more than happy to pursue those folks or those topics. We'd love to be able to do that.


Elliot Berman: Okay, John, you have a great rest of the week. You and I will be off next week, but we will post an archive edition at the end of next week. So watch for that, and then we're going to be off the following week as well. So you get two archive editions and then watch for us again, with new Podcasts on January 7th in 2022.


John Byrne: That sounds great. Everybody, happy holidays, Merry Christmas, happy new year. I look forward to connecting back with everybody in 2022.


Elliot Berman: All right, John, talk to you next year.


John Byrne: Alright, Elliot, take care. See ya.


Elliot Berman: Bye-bye.