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FinCEN Announces MOU with China Anti-Money Laundering Monitoring and Analysis Center
On December 11, FinCEN announced that Director Jennifer Shasky Calvery and the China Anti-Money Laundering Monitoring and Analysis Center (CAMLMAC) Director-General Luo Yang of the People’s Republic of China signed an MOU “to create a framework to facilitate expanded U.S.-China collaboration, communication, and cooperation between both nations’ financial intelligence units.” As the financial intelligence unit (FIU) for the United States, FinCEN is responsible for combating money laundering and the financing of terrorism by collecting, analyzing, and disseminating financial intelligence to law enforcement and other relevant authorities; as the Chinese counterpart to FinCEN, the CAMLMAC has comparable responsibilities to the Chinese government. The recently announced MOU is intended to provide a “mechanism for sharing information on money laundering and the financing of terrorism in order to prevent illicit actors from abusing either country’s financial systems.”
FinCEN Director Highlights the Significance of SAR Filings
On December 9, FinCEN Director Calvery highlighted at a joint FBIIC-FSSCC meeting the role of FinCEN in gathering and analyzing financial intelligence and the value of Suspicious Activity Reports (SARs) in curtailing malicious cyber activity. Calvery noted the importance of attribution information, such as IP addresses, timestamps, e-mail addresses, and the nature of the suspicious activity, when included in SAR filings, in helping FinCEN and law enforcement agencies deflect cyber-attacks, detect the source of such attacks, and identify members of money laundering networks. “For example, SARs filed by several different financial institutions played a vital role in furthering an investigation where a regional Florida bank had nearly $7 million fraudulently wired out of one of its accounts,” Calvery explained. Calvery emphasized the importance of including cyber-derived information (such as IP addresses and bitcoin wallet addresses) in SAR filings, noting that while less than two percent of filed SARs contain IP addresses, the information is “incredibly important to FinCEN analysts and law enforcement investigators working to combat cyber-crimes.”
FinCEN Extends Deadline for Report of Foreign Bank and Financial Accounts Filings
On December 8, FinCEN issued a notice extending the deadline for certain filers to submit the Report of Foreign Bank and Financial Accounts (FBAR) because filers continue to submit questions to FinCEN that require additional consideration and possible regulatory changes. The notice extends the filing deadline for FinCEN Form 114 – FBAR from June 30, 2016 to April 15, 2017 for “certain individuals with signature authority over but no financial interest in one or more foreign financial accounts.” FinCEN issued notices announcing identical extensions the past four years, and the extension applies to the reporting of signature authority held during the 2015 calendar year, as well as to the reporting deadlines extended by previous notices.
FinCEN Appoints Andrea Sharrin as Policy Division Associate Director, Replaces Jamal El-Hindi
On December 7, FinCEN announced the selection of Andrea Sharrin as Associate Director for its Policy Division, the division responsible for drafting BSA rules as well as addressing strategic policy issues surrounding anti-money laundering and countering terrorist financing. Sharrin currently serves as the Director of the Office of Compliance and Enforcement in FinCEN’s Enforcement Division with responsibility for FinCEN's BSA compliance and enforcement program. In her new role, Sharrin will lead the team that “defines the framework for protecting the U.S. financial system from money laundering, terrorist financing, and other illicit finance,” and will oversee FinCEN’s regulatory functions, which include drafting guidance and issuing regulatory rulings related to BSA. Sharrin replaces Jamal El-Hindi who was named FinCEN’s Deputy Director earlier this year.
FinCEN Re-opens Comment Period for Final Rule Imposing Fifth Special Measure against FBME Bank Ltd.
On November 27, FinCEN published in the Federal Register a Notice to re-open the comment period for its previously issued Final Rule imposing the fifth special measure against FBME Bank Ltd. (FBME). On August 27, the day before the Rule was scheduled to take effect, the United States Court for the District of Columbia Court granted FBME’s motion for a preliminary injunction and enjoined the Final Rule from taking effect. On November 6, the Court granted the Government’s motion for voluntary remand to allow for further rulemaking proceedings. FinCEN’s most recent Federal Register Notice to re-open the comment period for the Final Rule solicits additional comments “particularly with respect to the unclassified, non-protected documents that support the rulemaking and whether any alternatives to the prohibition of the opening or maintaining of correspondent accounts with FBME would effectively mitigate the risk to domestic financial institutions.” Comments are due by January 26, 2016.
U.S. Department of the Treasury Senior Staff Deliver Remarks Regarding Enforcement Efforts
On November 16, FinCEN Director Jennifer Calvery and Treasury’s Acting Under Secretary Adam Szubin delivered remarks at the American Bankers Association and American Bar Association Money Laundering Enforcement Conference on continued AML enforcement efforts. Szubin focused on the topic of “de-risking,” which he described as “instances in which a financial institution seeks to avoid perceived regulatory risk by indiscriminately terminating, restricting, or denying services to broad classes of clients, without case-by-case analysis or consideration of mitigating options,” and addressed Treasury’s efforts to curtail the negative effects attributed to de-risking, such as preventing access to the dollar and pushing people out of the regulated financial system. Szubin emphasized, however, that the Treasury would not “dilute or roll back [its] AML/CFT standards,” but expects financial institutions to be vigilant when identifying potential risks and to implement AML/CFT programs that effectively address risks associated with illicit financing on a client-by-client basis. In a separate speech, Director Calvery addressed FinCEN’s reliance on Bank Secrecy Act (BSA) data to “uncover risks, vulnerabilities, and gaps in each financial sector,” noting that BSA data supports FinCEN’s ongoing AML enforcement efforts.
FinCEN Issues Final Civil Money Penalty Against U.S.-based Casino Over BSA Violations
On November 6, FinCEN issued a final assessment of civil money penalty against a Las Vegas-based casino and its branch offices for violating the BSA by failing to develop and implement a sufficient AML program and report suspicious activity in connection with its private gaming areas. As FinCEN previously announced on September 8, the terms of the assessment require the casino to pay an $8 million civil monetary penalty, hire an independent auditor to test its BSA/AML compliance program, and conduct a look-back review of all transactions through branch offices in Asia and California for recordkeeping and reporting compliance. FinCEN’s final assessment follows approval on October 19 of the settlement from the Bankruptcy Court for the Northern District of Illinois, as the casino remains a debtor in its bankruptcy case.
Georgia Resident Pleads Guilty to Charges of Operating Unlicensed Money Transmitting Business
On October 13, the DOJ announced that a Columbus, Georgia resident pleaded guilty to one count of operating an unlicensed money transmitting business. According to the DOJ, between February 2013 and March 2014, the individual unlawfully owned, operated, and managed multiple money transmitting companies throughout the Columbus area, offering check-cashing services. The individual allegedly knew that he was required to register his company with FinCEN and with the state of Georgia, but failed to do so. Scheduled to face sentencing in January 2016, the individual faces a statutory maximum sentencing of five years and has agreed to a forfeiture order of more than $1,300,000.
FinCEN to Withdraw 2011 Proposed Rule Against Lebanon-Based Bank
On September 28, FinCEN announced its intention to withdraw its February 2011 Notice of Finding and Notice of Proposed Rulemaking identifying a Lebanon-based bank as a “financial institution of primary money laundering concern” under Section 311 of the USA PATRIOT Act. The bank had been linked with Hezbollah and found to be involved in international narcotics and money laundering networks. Accordingly, through the Notice of Finding, FinCEN sought to impose certain “special measures” on the bank which are designed to, among other things, weaken foreign banks suspected of money laundering and financing terrorism, as well as protect American financial institutions. However, given that the bank’s license was revoked in September 2011 by Lebanon’s central bank, the Banque du Liban, and all of its assets were subsequently liquidated, the bank no longer exists as a foreign financial institution and, as such, is no longer subject to the prohibitions set forth in the proposed rule. The withdrawal of FinCEN’s Notice of Finding does not require a comment period and will be effective upon publication in the Federal Register.
Leading Casino Settles with FinCEN for $8 Million for BSA Violations
On September 8, FinCEN announced the assessment of an $8 million civil money penalty against a leading U.S.-based casino for its willful violations of the BSA’s requirements to develop and implement a reasonably designed AML program and to report suspicious activity. Among other things, FinCEN alleged that the casino failed to implement adequate internal controls, conduct adequate independent testing of AML compliance, provide adequate training, and file SARs. Of note were private gaming salons that cater to wealthy patrons and allowed such patrons to gamble anonymously. In addition to the $8 million penalty, which will be allowed as a general unsecured claim in the casino’s bankruptcy proceeding (pending approval of the consent by the bankruptcy court), the casino must also, among other things, hire an independent third party to test its BSA/AML compliance program, annually provide its implementation plan and training program to FinCEN for a period of three years, and conduct a look-back review of all transactions through branch offices in Asia and California for SAR compliance.