New Rule Adopted As Of January 30, 2010 For The Bank Secrecy Act By The Financial Crimes Enforcement Network

Effective January 3, 2011, the Financial Crimes Enforcement Network (“FINCEN”) issued a final rule to amend the Bank Secrecy Act (“BSA”). The amendments to the BSA pertain to the confidentiality of reports of suspicious activity.

The purpose of the amendments is to:

• Address the statutory prohibition against the disclosure by the Government of a suspicious activity.
• Clarify the scope of the statutory prohibition against the disclosure by a financial institution of a suspicious activity.
• Clarify that the standard applicable to the disclosure of a suspicious activity by the government is to fulfill official duties consistent with the purposes of the Bank Secrecy Act.
• Modify the safe harbor provisions to include changes made by the USA Patriot Act, also known as the Uniting and Strengthening of America by Providing the Appropriate Tools Required to Intercept and Obstruct Patriotism Act of 2001.
• Make minor technical revisions for consistency among the different rules relating to suspicious activity.

The purpose of the amendments and the adoption of the final rule is to increase the efficiency and effectiveness of the Anti-Money Laundering and Counter Terrorist Financing policies.

Here are some commonly asked questions and answers which banks and other financial institutions may want to observe:

Recommendations for Banks and Other Financial Institutions

1. Review internal controls to ensure policies and procedures are in place to protect the confidentiality of a SAR and information which would reveal the existence of a SAR.
2. Review ongoing training of employees to determine if more emphasis should be placed on the individual employee’s responsibility to keep SARs confidential.
3. Consider implementing some or all of the risk-based measures discussed in the Financial Crimes Enforcement Network Advisory (FIN-2010-A014).

Posted by: Patricia Polis McCrory

Categories: Bankruptcy & Banking Law, Duties to Customers, Legislation & Regulation