Money Laundering, Terrorism and Financial Institutions - USA Patriot Act Monitor

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12/06/2010 FinCEN Tweaks and Tightens SAR Confidentiality Requirements

FinCEN has tightened the rules allowing state and tribal authorities to get SAR filing information from institutions regulated by such authorities. There appears to have been a concern that state and tribal authorities, if they are not overseeing institutions regarding BSA requirements, should not have access to confidential SAR information.

A general regulatory authority of a state, without a state law authorizing a state agency to examine a state institution for BSA compliance (or, alternatively, a state law requiring compliance with all federal laws and regulations), would not be enough to qualify a state agency to obtain copies of SARs or copies of information that would indicate a SAR had been filed as to a specific institution. FinCEN allows state agencies that do not satisfy this requirement to seek access to SAR information by applying directly to FinCEN.

Self-regulatory organizations, such as FINRA, may also have access to SAR information, provided the federal agency responsible for oversight of the SRO agrees. The federal agency, such as the SEC or the CFTC, may permit such sharing on a case-by-case basis, or may provide general parameters of information sharing with SROs. Records of such approvals are to be maintained, particularly given that some institutions come under the jurisdiction of more than one regulator and more than one SRO.

FinCEN notes in an Advisory (FIN-2010-A014) that disclosure that is permitted under the letter of the regulations is in fact not permitted if the institution “has reason to believe it may be disclosed to any person involved in the suspicious activity that is the subject of the SAR.” Thus, disclosure to an affiliate, where a high officer of the affiliate is mentioned in the SAR, may not be permitted even if the affiliate would otherwise qualify for receiving the information. The various releases regarding information sharing will be discussed in the next issue of the Monitor.


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