Three takeaways from FinCEN’s statement on enforcement of BSA/AML requirements
As we noted in a client alert late last week, the federal banking agencies released on August 13, 2020, a joint statement on enforcement of Bank Secrecy Act/Anti-Money Laundering (“BSA/AML”) requirements.
At the time, the Federal Deposit Insurance Corporation made reference to a possible separate “Statement on Enforcement of the Bank Secrecy Act” from FinCEN. FinCEN released that statement earlier today. We summarize below three key takeaways from the FinCEN statement:
- The FinCEN statement asserts (emphasis added) that: “When FinCEN takes an enforcement action, it will seek to establish a violation of law based on applicable statutes and regulations. FinCEN will not treat noncompliance with a standard of conduct announced solely in a guidance document as itself a violation of law.” The underlined sentence reflects a position on the role of guidance that other agencies have also emphasized in recent years. But, given a number of FinCEN regulations are quite high-level and have been extensively interpreted in the FFIEC BSA/AML Manual and other guidance, it remains to be seen how FinCEN will apply the underlined sentence in practice.
- The FinCEN statement lists the types of actions FinCEN may take in light of an identified violation, including an informal “warning letter” for less serious violations (i.e., in lieu of a cease and desist order or civil money penalty).
- The FinCEN statement identifies the factors FinCEN will consider in determining the appropriate disposition of an AML violation. Those factors are generally what one would expect — e.g., the pervasiveness, seriousness and practical effects of the violation; the institution’s self-identification, disclosure, and cooperation in connection with the violation (or lack thereof); the institution’s history of prior violations; and actions taken by other agencies with overlapping jurisdiction, including bank regulators.
The full text of the FinCEN statement is available here.