RE: Pilot Program on Sharing of Suspicious Activity Reports and Related Information With Foreign Branches, Subsidiaries, and Affiliates,Docket Number FINCEN–2022–0002 and RIN 1506–AB51
Financial Crimes Enforcement Network
P.O. Box 39
Vienna, VA 22183
Dear Sir or Madam:
The American Bankers Association (ABA) is pleased to comment on FinCEN’s proposal to establish a pilot SAR sharing program with foreign branches, subsidiaries, and affiliates (collectively, the Affiliates). ABA has long supported allowing domestic financial institutions to share SARs with their foreign Affiliates, but we are concerned that the pilot program, as proposed, will not succeed and needs to be significantly revised. We urge FinCEN to work with financial institutions prior to issuing a final rule in order to create a pilot program that will minimize the burdens and encourage participation.
The current approach to SAR sharing with Affiliates creates many inefficiencies that unnecessarily consume resources that should be deployed to combat money laundering and terrorist financing. Under the current approach, a SAR cannot be shared with an Affiliate, but a bank can strip out the information underlying the SAR filing and share that information with the Affiliate. However, it takes time and resources to strip out the SAR indicators, and when the Affiliate receives the data, it takes little imagination to conclude that the information was shared because a SAR was filed in the home jurisdiction. Therefore, permitting SARs sharing with Affiliates would facilitate the reallocation of resources currently devoted to a compliance exercise to efforts to combat illicit finance—which will improve the efficiency and effectiveness of BSA/AML monitoring and enhance law enforcement’s ability to detect and prevent domestic and international money laundering and terrorist financing.
ABA believes that letting banks share information with Affiliates will go a long way to promoting a more efficient and effective compliance regime. Data security and confidentiality are critical components for sharing as is limiting sharing to certain jurisdictions. Since SAR data has not been subject to due process and since the information is highly sensitive, both to protect law enforcement investigations and to protect those named in the SAR, it is important to ensure that the information is properly protected. Therefore, appropriate steps should be taken to maintain the security and confidentiality of any SARs that are shared.
To ensure that FinCEN and participants benefit from lessons learned from the program, ABA encourages FinCEN to begin planning now to extend the pilot. By the time the proposal is finalized and financial institutions begin to share SAR data, it will be close to the January 2024 deadline. It will be necessary to extend the pilot to collect sufficient data to determine what changes should be made to make the program permanent.
The final rule should also define how FinCEN will evaluate the success or failure of the pilot. ABA recommends that FinCEN consider information and data reflecting whether participants have been able to share SAR data without inappropriate disclosures or violations of data security or confidentiality of those who are the subjects of the SARs being shared. In addition, if it can be measured, the pilot should be evaluated based on metrics demonstrating efficiencies and effectiveness achieved in BSA/AML compliance by participants.
We agree that SAR sharing must be subject to appropriate standards and requirements regarding data security and the confidentiality of personally identifiable information and that FinCEN needs information and data to assess whether pilot participants have met these objectives. However, the proposed application process and the quarterly reports are too burdensome and need to be significantly streamlined to encourage banks to participate. This is particularly important since the data required will have to be collected manually. ABA also encourages FinCEN to work with applicants and participants to resolve issues that arise during the pilot.
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