BSA: How Hard Is A Commentary Anyway?

Many aspects of the Bank Secrecy Act and FinCEN's regulations have banks truly holding their necks out over the guillotine waiting for the ax to fall. There are a lot of gray areas in BSA and they all involve risk.

For years, the banking industry has been asking for a BSA commentary to help them comply. At the Money Laundering Conference jointly sponsored by ABA (American Bankers Association) and ABA (American Bar Association), one of the sessions was dedicated to developing a commentary for BSA.

Legal staff at FinCEN seems to have some trouble with the commentary concept. Stephen Kroll, Chief Counsel at FinCEN made some surprising comments at the conference. Now, the session began with a team of attorneys drafted into service by ABA's (that's American Banker's Association) John Byrne, one of the banking industry's lead crusaders for BSA rule improvement. The team has actually put together a rough draft commentary and is willing to present it (with no copyright strings attached) to Kroll. The idea is to jumpstart the commentary process by getting the work about 87.5% done for free.

Kroll, however, is still having trouble understanding just what a commentary would do and why it is needed. After all, he says, there is already a regulation, and the regulation and a commentary are basically the same thing in the eyes of the law.. Of course, they are NOT the same thing - assuming that a commentary actually does answer questions - to the user.

Kroll admits that his office steadily receives a heavy load of questions. This, however, does not seem to persuade him that there is any need for clarification. (Maybe he likes getting all those phone calls.)

Kroll also doesn't seem to have any idea how to get started. This editor would suggest starting with the questions. That's an indicator of what isn't clear. Second, there is that free offering from the ABA's working (and they really worked) group. He could also call the Federal Reserve and get some advice. The Federal Reserve staff have done commentaries to their regulations, and some of those regulations are doozies. Regulation Z rivals anything else on the books - even RESPA (for which, we note, there is also no commentary). The FRB staff have the commentary writing process honed to a fine art. They ought to be able to give FinCEN some useful advice. But Kroll has not contacted anyone at the FRB! Instead, he seems to have spent his time thinking about how hard writing a commentary would be and different ways to approach it. He also seems to think that writing a commentary would take at least three years and probably more.

It's not that hard - this editor has worked on commentaries, and even led the process of developing the Commentary to Regulation B. All we had to work with were old interpretive letters, Federal Register documents, and a long list of industry questions. And we were done in less than a year.

While no commentary can ever answer all questions, the FRB's commentaries have become a reliable, steady vehicle for obtaining clarification to problems that develop. Often the problems are the result of developments in the products, industry, or economy, that require new clarification. Commentaries are an effective method for the regulator to provide that clarification. Most important, commentaries help banks carry out the purpose of the law and regulation. The banks are asking for help in carrying out their BSA responsibilities. FinCEN should be interested in providing that help. After all, where would FinCEN be without banks?

Copyright © 1997 Compliance Action. Originally appeared in Compliance Action, Vol. 2, No. 14, 12/97