Compliance Blog

Written by Shari R. Pogach, Regulatory Paralegal

Last December, FinCEN assessed a $25,000 civil money penalty against a bank employee because he violated the Bank Secrecy Act (BSA).  Not only did Frank Mendoza reveal the existence of a Suspicious Activity Report (SAR) by contacting the subject of the report, he then solicited bribes from the subject in return for a promise to assist with any bank proceedings or federal criminal investigation.  The assessment against Mendoza is a clear indication of the agency’s willingness to use its authority to assess a civil money penalty against anyone involved in an unauthorized disclosure of a SAR.

FinCEN's Rule on Confidentiality.  FinCEN recently released a review and evaluation on the impact of its final rule, effective January 3, 2011, on the confidentiality of SARs.  In the 16 months after issuing the final rule, the agency’s regulatory helpline received 338 SAR confidentiality-related inquiries, an increased average of 18 per month, reflecting a greater interest in understanding and applying the new rule, ensuring SAR confidentiality according to FinCEN. Inquiries received after the issuance of the final rule were similar to those prior to the final rule. About 41 percent (140) of callers sought assistance in appropriately responding to subpoenas received from lawyers. Inquiries regarding responding to law enforcement requests for SARs increased to 32 percent (108), while callers seeking assistance in determining their ability to share SARs with auditors and regulators decreased to 8 percent (28). Another 8 percent of callers sought assistance with sharing SARs with their institutions’ legal counsel.  During the 16-month period of the review, as well as the preceding 12-month period, depository institutions accounted for 73 percent of SAR confidentiality-related inquiries.

Additional Guidance.  In addition to the final rule, FinCEN has published the following related advisories and guidance concerning SAR confidentiality:

FIN-2010-A014 - Maintaining the Confidentiality of Suspicious Activity Reports

FIN-2010-G006 - Sharing Suspicious Activity Reports by Depository Institutions with Certain U.S. Affiliates

Notice of Availability of Final Interpretative Guidance—Sharing Suspicious Activity Reports by

Depository Institutions and Securities Broker-Dealers, Mutual Funds, Futures Commission Merchants, or Introducing Brokers in Commodities With Certain U.S. Affiliates

FIN-2012-A002 - Subject: SAR Confidentiality Reminder for Internal and External Counsel of Financial Institutions

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BSA Blast.  The July quarterly edition of NAFCU’s BSA Blast is now available for download and includes a new BSA quiz.