• Services
  • Attorneys
  • Media & Insights
  • Online Payment
Results may vary depending on your particular facts and legal circumstances. No aspect of this advertisement has been approved by the Supreme Court of New Jersey. A description of the selection methodology can be found here.
  • Services
  • Attorneys
  • Media & Insights
  • About Us
  • Delivering Value
  • Diversity & Inclusion
  • Meritas
  • Contact Us
  • Online Payment
    A
    Alternative Dispute ResolutionAntitrust & Trade RegulationAppellate Practice
    B
    Banking & Financial ServicesBankruptcy, Creditors’ Rights, and Financial RestructuringBeer LawBusiness Law
    C
    Cannabis LawConstruction LawCooperative and Condominium Law (Co-op & Condo)Criminal Defense
    E
    Economic Development LawElder Care & Special Needs LawElectronic Discovery ("E-Discovery")Environmental LawEstate Planning and Administration & Wealth PreservationExecutive Compensation and Employment Strategies
    F
    Food, Beverage & HospitalityFranchise Law
    H
    Health Care & Life SciencesHealth Care ProvidersHigher EducationHospitals and Health Networks
    I
    ImmigrationInsurance CoverageIntellectual PropertyIntellectual Property Litigation, Arbitration, and Dispute ResolutionIntellectual Property Portfolio Strategy, Management & LicensingInternational BusinessInternet Law
    L
    Labor & EmploymentLiquor Law, Licensing, Manufacturing, and DistributionLitigation
    M
    Media Law & Creative Economy PracticeMergers & AcquisitionsMunicipal Law
    N
    Non-Profit Law
    P
    Patent Preparation and ProsecutionPharmaceutical / Medical Devices / Pharma ServicesProducts and Consumer Liability DefenseProfessional LiabilityPublic Utilities
    R
    Real Estate, Finance, and Land Use
    S
    SecuritiesSolar Energy
    T
    TaxationTelecommunicationsTrademark & Copyright Protection & Enforcement
    V
    Venture Tech & Emerging Growth Companies
    W
    White Collar Investigations & DefenseWorkers’ Compensation
    • New Jersey
    • New York
    • Pennsylvania
    • Blogs
    • Articles
    • Podcasts
    • COVID-19 Resources

    Categories

    Banking Business and Tax Planning Business Law Coming to America Consumer Defense Criminal—White Collar Cyber Security and Data Protection E-Commerce General Health Care Immigration Intellectual Property Internet Law Labor & Employment Litigation Litigation>Product Liability Defense Outbound Rates REWIND Securities Taxation
    Blogs > Business Without Borders® > Piloting SARs for Foreign Bank...
    In Memoriam
    Peter D. Hutcheon
    Visit Profile

    Piloting SARs for Foreign Bank Affiliates

    Piloting SARs for Foreign Bank Affiliates

    On Jan. 1, 2021, Congress enacted, over President Trump's veto, the National Defense Authorization Act, a 4500-page behemoth that in its midst contained the Anti-Money Laundering Act of 2020 ("AMLA"). I attempted to give some overview of this legislation in my Jan. 12, 2021 Blog "In Defense of the Realm: The NDAA, Money Laundering and Terrorist Financing." Responsibility for implementing the AMLA falls on a special unit of the U.S. Department of the Treasury, the Financial Crimes Enforcement Network, or FinCEN. One of the provisions in AMLA authorizes FinCEN to set up a pilot program to allow financial institutions operating in the United States, even if owned by non-U.S. institutions (except for those in certain excluded areas, such as Russia and China and other jurisdictions subject to U.S. sanctions or as determined by the Secretary of the Treasury), to share information about suspicious activities more freely with their foreign affiliates.

    Until AMLA, U.S. financial institutions were not permitted to disclose the contents of Suspicious Activity Reports ("SAR") filed with FinCEN and other law enforcement authorities, except that foreign-owned institutions with U.S. operations (a subsidiary, branch, or affiliate) were allowed to share a SAR with its head office or controlling company, as well as certain domestic-U.S. affiliates subject to the same SARs reporting restrictions. So, for example, a New York subsidiary of a Spanish bank could share SARs information with its Spanish headquarters or with other U.S. affiliates of the New York subsidiary. But no information in a SAR, or even the existence of a SAR itself, could be shared with a sibling institution in Singapore or Brazil; only the Spanish bank headquarters could pass that information to the affiliates where the actors might be engaged in financial transactions.

    Pilot Program for Foreign Bank Affiliates

    On Jan. 24, 2022, FinCEN issued a Notice of Proposed Rulemaking seeking comment on a pilot program that would allow U.S. financial institutions owned by foreign companies to share SARs information with foreign affiliates in order to enhance the anti-money laundering. The proposed pilot program is to run through Jan. 1, 2024, and might be extended for two years. The comment period ends on Monday, March 28, 2022. Financial institutions may participate in the pilot program only if they apply and are accepted. 

    The application process includes a filing with FinCEN, which must (among other items): i) list the applicant's non-U.S. branches, subsidiaries, and affiliates (including the jurisdiction of the entity) with which the applicant may share SARs (both the existence of the SAR and its underlying information); ii) the purposes for which those non-U.S. entities would use the SAR information; and iii) a description of all internal controls of the applicant (and of the entities with which it may share SARs) that are in place to prevent unauthorized disclosures of SARs.

    Once accepted, pilot program participants must file quarterly reports with FinCEN that detail: i) the number of SARs shared; ii) the name, jurisdiction, relationship with the participant of each entity that received a shared SAR, and the purpose and use of the sharing; iii) legal and compliance issues that arise; iv) any technical difficulties experienced; v) enhancements to the participant's anti-money laundering ("AML") program gleaned from participating in the pilot program; and vi) any shortcomings identified in the participant's AML program.

    SARs Pilot Program Participants

    Pilot program participants are also required to have sufficient policies, procedures, and internal controls both for themselves and for their respective affiliated non-U.S. entities to protect against unauthorized disclosure of SAR information, including: i) confidentiality agreements with all personnel in the foreign affiliates with access to SAR information to safeguard that information; ii) systems to securely transmit and store SAR information; and iii) processes for participant's U.S. personnel to review requests from foreign law enforcement, regulators, or other persons for SAR information, and immediately to notify FinCEN of the requests.

    The pilot program as proposed allows FinCEN to terminate the participation of a participant at any time for a variety of reasons, including geo-political developments, internal control deficiencies, or issues suggesting that the participant and/or its non-US affiliates are unable adequately to safeguard SARs information. Hence, a financial institution thinking about participating will want to complete a thorough internal audit of its AML program and those of its non-U.S. affiliates, ideally before applying. The tasks will be easier for those financial institutions that already share SARs with their non-U.S. head offices. 

    AMLA expresses the hope that expanded SAR sharing will enhance AML oversight and compliance, not least because a relevant SAR can be shared directly with a foreign affiliate without having to pass through the bureaucracy of a corporate headquarters. On the other hand, participation in the pilot program will certainly involve costs for AML oversight and pilot program reporting. It may also increase regulatory scrutiny and enforcement, including enforcement for failure to meet the requirements of the pilot program.

    If you have any questions about this post or any other related securities or general business law matters, please feel free to contact me at pdhutcheon@norris-law.com.

    In Memoriam
    Peter D. Hutcheon
    Visit Profile

    Related Posts

    Fed Chair Jerome Powell and Treasury Secretary Janet Yellen Brief Congress on U.S. Economy Post-COVID Committee on Foreign Investments in the US (CFIUS) is Fired Up Establishing Bank or Financial Accounts in the US – Consider the Impact of New FinCEN Rules on Beneficiaries

    Share

    Tags

    #FinCen #Money Laundering #Treasury

    Helpful links

    • About Us
    • News
    • Services
    • Blogs
    • Attorneys
    • Articles
    • (COVID-19)
    • Award Methodology
    • Events
    • Join our Team
    Connect
    Online Payment

    Connect with Us

    • LinkedIn
    • Facebook
    • Twitter
    • Instagram
    • Youtube

    Join our growing team

    We are looking for quality attorneys to help us do more for our clients. At Norris McLaughlin, each attorney has the same opportunity to succeed whether you’re at the beginning of a career or pinnacle of the profession.

    Learn More

    Subscribe to our content

    Receive timely legal information delivered to your inbox

    This field is for validation purposes and should be left unchanged.
    © , Norris McLaughlin, P.A., All Rights Reserved. Attorney Advertising.
    VIEW OUR DISCLAIMER,  TERMS OF USE,  AND PRIVACY POLICY

    We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume you consent to our cookie policy. Learn more