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Financial Services Law Insights and Observations

FinCEN plans to undertake future no-action letter rulemaking

Agency Rule-Making & Guidance FinCEN Of Interest to Non-US Persons Bank Secrecy Act Anti-Money Laundering Combating the Financing of Terrorism No Action Letter Financial Crimes

Agency Rule-Making & Guidance

On June 30, the Financial Crimes Enforcement Network (FinCEN) announced the completion of a report on whether to establish a process for issuing no-action letters in response to inquiries concerning the application of the Bank Secrecy Act (BSA) and other anti-money laundering and countering the financing of terrorism laws to specific conduct, “including a request for a statement as to whether FinCEN or any relevant Federal functional regulator intends to take an enforcement action with respect to such conduct.” As required pursuant to Section 6305 the Anti-Money Laundering Act of 2020 (included as part of the National Defense Authorization Act for Fiscal Year 2021 and covered by InfoBytes here), FinCEN submitted its no-action letter assessment to Congress. The assessment involved consultation with the Attorney General and other entities including the federal functional regulators, state bank and credit union supervisors, and other federal agencies.

The agency analyzed various issues when conducting its assessment, including “whether a formal no-action process would help to mitigate or accentuate illicit finance risks in the United States.” Among other things, the report concluded that the majority of the consulting parties agreed that FinCEN should implement a no-action letter policy. “The primary benefits identified by those in favor of a no-action letter process are that it could promote a robust and productive dialogue with the public, spur innovation among financial institutions, and enhance the culture of compliance and transparency in the application and enforcement of the BSA,” FinCEN stated. According to FinCEN acting Director Michael Mosier, the agency concluded “that a no-action letter process would be a useful complement to its current forms of regulatory guidance and relief.” The agency stated it intends to undertake a future rulemaking “subject to resource limitations and competing priorities” to establish a process for issuing no-action letters that will supplement its current forms of regulatory guidance and relief. However, FinCEN noted that the no-action letter process would be most effective and workable if it were limited to the agency’s exercise of its own enforcement authority, instead of also addressing other regulators’ exercise of their own enforcement authorities.

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