Financial Crimes Enforcement NetworkFinancial Crimes Enforcement Network

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Jeffrey Pratt

Deputy Assistant Director

Office of Compliance

November 2, 2011

NAFCU BSA Update

Topics

� FinCEN mission

� Frequent Exam Problems

� BSA Data Value

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� BSA Data Value

� Improving SAR Filing

� FinCEN Rulemaking

� Available Resources

� Questions

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FinCEN Mission Statement

The mission of the Financial Crimes Enforcement

Network is to enhance U.S. national security, deter

and detect criminal activity, and safeguard financial

systems from abuse by promoting transparency in

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systems from abuse by promoting transparency in the U.S. and international financial systems.

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FinCEN Mission Statement

We do this by:

� Administering the Bank Secrecy Act;

� Supporting law enforcement, intelligence, and

regulatory agencies through sharing and analysis

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regulatory agencies through sharing and analysis

of financial intelligence;

� Building global cooperation and technical

expertise with our counterpart financial intelligence

units; and

� Networking customers and BSA information.

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Goals of the Bank Secrecy

Act

� Increase the transparency of the U.S. financial system

so that money laundering, terrorist financing, and

other financial crime can be deterred, detected, and,

ultimately, prevented

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� The BSA accomplishes this by requiring:

� Anti-money laundering programs tailored to the

unique risks posed by each financial institution’s

business operations; and

� Reports and records of certain information that is

highly relevant and useful in the detection,

deterrence, and investigation of financial crime. 5

Frequent Exam Problem Areas

� Policies, Procedures, Internal Controls

� Independent Testing

� Customer Identification Program

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� Customer Identification Program

� Suspicious Activity Reporting (Policies; Filing)

� Training

� 314(a) Searches

� Risk Assessment

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Value of BSA Data

� Provides Tip-Off to Law Enforcement

� Illuminates unknown identifying information and relationships

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� Enables Strategic Analysis of trends through analyzing BSA data as a whole

� Provides powerful deterrence factor

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How FinCEN Uses BSA Data�Support of our law enforcement and regulatory partners

� Both domestically and internationally

� Advanced Targeting and Analysis

� Conduct industry threat assessments and studies

� Mortgage Loan Fraud

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� Mortgage Loan Fraud

� Commercial Real Estate Industry Assessment

� Development of regulatory policy and action

� Determine where new regulations may be needed

� Identifying Non-Compliance

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Improving SAR Filings

� E-Filing

� Free, secure, web-based system

� Greater data security

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� Greater data security

� E-Filers have a lower rate of errors than paper filers

� Benefits to internal audit, and recordkeeping

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Improving SAR Filings

� Ensure you are completing “Critical Fields” according

to form instructions and FinCEN guidance

� Include activity or branch location in SAR filings

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� Remember your audience

� Review SAR narratives for completeness

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FinCEN Rulemaking

Recent Final Rules

� Transfer and Reorganization of Bank Secrecy Act

Regulations (October 26, 2010)

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� Confidentiality of Suspicious Activity Reports (Effective

January 3, 2011) (November 23, 2010)

� Amendment to the Bank Secrecy Act Regulations—

Reports of Foreign Financial Accounts (February 24,

2011) 11

FinCEN Rulemaking

Recent Final rules

� BSA Regulations - Definitions and Other Regulations

Relating to Money Services Businesses (July 18,

2011)

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2011)

� Amendment to the BSA Regulations – Definitions and

Other Regulations Relating to Prepaid Access (July

26, 2011)

� Comprehensive Iran Sanctions, Accountability, and

Divestment Act of 2010 (“CISADA”) Reporting

Requirements Under Section 104(e) (October 5, 2011,

delivered to the Federal Register) 12

SAR Confidentiality

� FinCEN Requirements

� Prohibited notification of any person involved

in the transaction that a report had been filed

� Often misinterpreted

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� Often misinterpreted

� Treasury interpretation broader

� Banking Agencies

� Stated that SARs were confidential

� FinCEN’s rules not specifically 13

SAR Confidentiality (new rules)

� Clarify existing disclosure prohibitions

� SAR or Info revealing existence of

� Attorneys

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� Attorneys

� Government Agencies

� Federal, State, Local, Tribal

� Disclosure prohibited to media

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FinCEN Rulemaking

Proposed Rules

� Reporting Requirement of International Transport of

Prepaid Access Products at U.S. Borders (October 12,

2011)

� Mandatory E-filing (September 14, 2011)

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� Mandatory E-filing (September 14, 2011)

� AML Program and SAR Requirements for Non-Bank

Residential Mortgage Lenders and Originators

(December 9, 2010)

� Amendment to the BSA Regulations – Cross-Border

Electronic Transmittal of Funds (September 27, 2010)

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Available Resources

� The SAR Activity Review, Trends, Tips, and Issues

� SAR reporting guidance

� Advisories/Bulletins/FAQs/Fact Sheets

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� Advisories/Bulletins/FAQs/Fact Sheets

� Analytic Assessments – Mortgage Loan Fraud, Commercial Real Estate Fraud, Identity Theft

� FinCEN web site – Law Enforcement Cases and Success Stories

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Contact Information

FinCEN Regulatory Helpline

1-800-949-2732

Financial Institutions Hotline

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Financial Institutions Hotline

1-866-556-3974 www.fincen.gov

E-Filing Service Desk Number

1-866-346-9478 (Option 1)

BSAEFilingHelp@fincen.gov17