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Orrick | FinCEN Pursues Its Next Steps, Posting its Priorities and Pondering a No-Action Process

The Financial Crimes Enforcement Network (FinCEN) has completed two of its early benchmark obligations arising out of the recently passed Anti-Money Laundering Act of 2020 (the “AML Act”), which we previously wrote about here.  First, FinCEN published its first-ever government-wide list of Anti-Money Laundering and Countering the Finance of Terrorism (AML/CFT) priorities.  Second, FinCEN published its report on the potential for a FinCEN no-action letter process.

Below are some key takeaways from these publications, and here is a deeper analysis of the issues.

Priorities: The AML Act required FinCEN to “establish and make public priorities for anti-money laundering and countering the financing of terrorism policy” within 180 days of the Act’s passage.  With this new list, FinCEN has now met this initial obligation and going forward must update the priorities at least once every four years.  FinCEN has until the end of this year to promulgate regulations incorporating the priorities into the examination and supervision requirements of financial institutions.  While there are no regulatory changes or new obligations for financial institutions until rulemaking is complete in December 2021,  FinCEN and other regulators encourage financial institutions to begin considering how these priorities and their associated AML risks apply to their businesses and how they can be incorporated into financial institutions’ AML compliance programs.

The priorities include:

  1. Corruption;
  2. Cybercrime, including Relevant Cybersecurity and Virtual Currency Considerations;
  3. Terrorist Financing—both foreign and domestic;
  4. Fraud;
  5. Transnational criminal organization activity;
  6. Drug trafficking organization activity;
  7. Human trafficking and human smuggling; and
  8. Proliferation financing.

No-Action Letters: The AML Act also required FinCEN to study, publish a report, and consider promulgating regulations establishing a FinCEN no-action letter process.  FinCEN submitted its report on June 28, 2021, and concluded that a no-action process would be beneficial and should be created subject to its resource and priorities limits. FinCEN believes that the process could spur innovation and enhance BSA compliance, but that authority for the letters should be held by FinCEN alone, and not other regulators, to increase efficiency.

Together, the publications represent FinCEN’s continuing progress in implementing the AML Act and offer insights for financial institutions regarding forthcoming regulatory priorities.  Financial institutions would be wise to consider the new priorities and examine their AML compliance programs with them in mind.

Authors:

  • Matthew Moses, Partner
  • Daniel Nathan, Senior Counsel
  • Matthew Reeder, Managing Associate
  • Benjamin Dobkin, Associate
  • Kristin Schwam, Associate

Compliments of Orrick, Herrington & Sutcliffe LLP – a member of the EACCNY.