FinCEN Statement on Enforcement of the Bank Secrecy Act

August 24th| 2020

The Financial Crimes Enforcement Network (FinCEN) recently released a statement describing its approach to enforcing the Bank Secrecy Act (BSA). The agency first clarifies that although the BSA mostly applies to “financial institutions”, enforcement actions may be brought against nonfinancial businesses and other people who violate the BSA.

FinCEN is most concerned about violations of applicable statues; FinCEN will not treat noncompliance with a standard of conduct announced solely in a guidance document as itself a violation of law. FinCEN further states that actual or possible violation may result in (1) no action; (2) a warning letter; (3) an equitable remedy, like an injunction; (4) settlement; (5) civil penalties; or (6) a criminal referral.

FinCEN considers both compliance with specific BSA requirements—such as registration, recordkeeping, and reporting requirements—as well as the adequacy of an anti-money laundering (AML) program, including the extent of the AML program’s compliance with pillar requirements, which are the required elements of an AML program. FinCEN’s statement concludes with a non-exhaustive list of factors it considers when determining the disposition of a case:

  1. Nature and seriousness of the violations, including the extent of possible harm to the public and the amounts involved.

  2. Impact or harm of the violations on FinCEN’s mission to safeguard the financial system from illicit use, combat money laundering, and promote national security.

  3. Pervasiveness of wrongdoing within an entity, including management’s complicity in, condoning or enabling of, or knowledge of the conduct underlying the violations.

  4. History of similar violations, or misconduct in general, including prior criminal, civil, and regulatory enforcement actions.

  5. Financial gain or other benefit resulting from, or attributable to, the violations.

  6. Presence or absence of prompt, effective action to terminate the violations upon discovery, including self-initiated remedial measures.

  7. Timely and voluntary disclosure of the violations to FinCEN.

  8. Quality and extent of cooperation with FinCEN and other relevant agencies, including as to potential wrongdoing by its directors, officers, employees, agents, and counterparties.

  9. Systemic nature of violations. Considerations include, but are not limited to, the number and extent of violations, failure rates (e.g., the number of violations out of total number of transactions), and duration of violations.

  10. Whether another agency took enforcement action for related activity. FinCEN will consider the amount of any fine, penalty, forfeiture, and/or remedial action ordered.

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