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Financial Services Law Insights and Observations

FinCEN Issues Advisory and Supplemental FAQs on Cyber-Events and Cyber-Enabled Crime

Federal Issues Banking Anti-Money Laundering FinCEN Bank Secrecy Act SARs Patriot Act Privacy/Cyber Risk & Data Security

Federal Issues

On October 25, FinCEN issued advisory bulletin FIN-2016-A005 reminding financial institutions of their Bank Secrecy Act (BSA) obligations to report certain cyber-events and cyber-enabled crime. The advisory highlights the importance of (i) reporting cyber-events and cyber-enabled crime through Suspicious Activity Reports (SARs); (ii) including cyber-related information such as IP addresses with timestamps, virtual-wallet information, device identifiers, and cyber-event information, in SAR reporting; (iii) collaborating with BSA/AML, cybersecurity, and other in-house units to facilitate “a more comprehensive threat assessment and develop appropriate risk management strategies to identify, report, and mitigate cyber-events and cyber-enabled crime”; and (iv) sharing cyber-related information – including specific malware signatures, IP addresses and device identifiers, and virtual currency addresses that seem anonymous – amongst financial institutions for the “purpose of identifying and, where appropriate, reporting money laundering or terrorist activities.” Importantly, the advisory distinguishes between mandatory SAR reporting of cyber-events, providing three specific examples, and voluntary reporting of cyber-events. Per the advisory, “[c]yber-events targeting financial institutions that could affect a transaction or series of transactions would be reportable as suspicious transactions because they are unauthorized, relevant to a possible violation of law or regulation, and regularly involve efforts to acquire funds through illegal activities.”

FinCEN simultaneously issued FAQs to supplement advisory bulletin FIN-2016-A005. The FAQs, which supersede 2001 FAQs regarding computer intrusion, provide answers to a set of nine questions. The FAQs address, among other things, (i) when cyber-related SAR reports should be filed; (ii) the type of information that should be included in cyber-related SARs; and (iii) cyber-event and cyber-enabled crime information sharing, pursuant to Section 314(b) of the USA PATRIOT Act, between financial institutions.

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