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#1473736 - 11/30/10 04:48 PM
FinCEN: Confidentiality of SARs Final Rule
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Member
Joined: Jul 2009
Posts: 75
Colorado
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Has anyone read the final rule and guidance issued by FinCEN on November 23rd?
The ABA came out with a summary, and now I'm totally confused.
From what I gather, FinCEN is stating that you cannot disclose the existence of a SAR to state authorities, however you can still provide supporting documentation for a SAR to state authorities.
The ABA is saying: under the first rule of construction..."It is important to note that the authority to disclose the underlying documents is restricted in the final rule to disclosure to federal authorities."
Does anyone have any thoughts about this??
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#1474135 - 12/01/10 01:40 PM
Re: FinCEN: Confidentiality of SARs Final Rule
COComplyGal
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Joined: Oct 2003
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Southeast
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COComplyGal Maybe this will help. http://www.mondaq.com/unitedstates/article.asp?articleid=116896You can disclose SARs to state law enforcement authorities as before. The restriction applies to regulatory authorities. Before you can disclose SAR information to a regulatory authority, you have to determine if that regulatory authority has the authority to examine its regulated entities for BSA compliance. If they do not, then the disclosure restrictions apply.
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#1474143 - 12/01/10 02:07 PM
Re: FinCEN: Confidentiality of SARs Final Rule
COComplyGal
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Joined: Oct 2000
Posts: 40,086
Cape Cod
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1. FinCEN is not saying that you cannot disclose the existence of a SAR to state authorities. The first sentence of the third paragraph of FinCEN's recent Guidance says, "However, the regulations make clear that, provided no person involved in the transaction is notified that the transaction has been reported, the prohibition does not include disclosures to (1) FinCEN; (2) any Federal, state, or local law enforcement agency; (3) any Federal regulatory agency that examines the depository institution for compliance with the BSA; or (4) any state regulatory authority that examines the depository institution for compliance with state laws requiring compliance with the BSA."
That fact is borne out in the final regulation's wording, at 103.18(e)(1)(ii)(A)(1).
Last edited by John Burnett; 12/01/10 02:11 PM.
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#1474771 - 12/01/10 09:48 PM
Re: FinCEN: Confidentiality of SARs Final Rule
Princess Romeo
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Joined: Dec 2005
Posts: 116
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Moneylaundering.com sent out an e-mail that indicates FinCEN's final rule is taking SAR confidentiality to the extreme as to require that "cover sheets" be placed over any documentation that indicates a SAR has been filed, that SARs need to be placed in a "restricted area" for viewing, and that a financial institution will need to have a "log" for any employees to view documentation that indicates whether or not a SAR has been filed.
If that is true, then FinCEN has really gone off the deep end.
Please say it isn't so? As far as I can tell, it isn't so. The only part of the documents linked in FinCEN news that could be remotely interpreted that way was from the Advisory where it states: FinCEN encourages organizations and authorities, both governmental and non-governmental, to be vigilant in ensuring SAR confidentiality is maintained. This includes making certain all employees, agents, and individuals appropriately entrusted with information in a SAR are informed of the individual obligation to maintain SAR confidentiality. This obligation applies not only to the SAR itself but also to information that would reveal the existence of the SAR. Likewise, such persons should also be informed of the consequences for failing to maintain such confidentiality, which could include civil and criminal penalties as explained herein.
A financial institution may want to consider including such information as part of its ongoing training of all employees. Additional risk-based measures to ensure the confidentiality of SARs could include, among other appropriate security measures, limited access on a "need-to-know" basis, restricted areas for reviewing SARs, logging of access to SARs, the use of cover sheets for SARs, or supporting documentation that indicates the filing of a SAR, or electronic notices that highlight confidentiality concerns before a person may access or disseminate the information.
Note 'risk-based'...not 'must' or 'may' or 'required'. All of the precautions listed read as possible methods for ensuring confidentiality, but it doesn't look like these specific methods would be required. There are any number of procedures that could be put in place to ensure SAR confidentiality, I think the emphasis is more on having adequate procedures for it based on what's right for individual institution risk levels. That is my interpretation anyway.
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#1474791 - 12/01/10 10:02 PM
Re: FinCEN: Confidentiality of SARs Final Rule
Kathleen O. Blanchard
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Only when examiners cannot find anything else to write about.  I can imagine banks being written up for not using SAR "cover sheets" when the SARs are stored in a locked cabinet inside the vault. The rationale: "Yes, but you might take one out sometime and leave it on your desk!" What a world.
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#1475647 - 12/03/10 02:32 AM
Re: FinCEN: Confidentiality of SARs Final Rule
Elwood P. Dowd
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I'm melting....... And yes - my fear is that examiners could take and run, really, really far with all of those confidentiality measures. But think about this, when an outside firm does the BSA Independent Testing, they review SAR's, and the write up about the adequacy of the SAR, SARs not filed, and process in general, they will have that information on their work papers. Do I sense an invisible elephant in the room?
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#1475667 - 12/03/10 11:29 AM
Re: FinCEN: Confidentiality of SARs Final Rule
Kathleen O. Blanchard
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I do as KB. Many banks utilize a numbering system for tracking or I use the e-file document number and any findings are referenced as such. No names are mentioned in the report or maintained in the work papers. For reference, any review examiners are directed to the Bank's internal secure SAR files. If your independent auditors are copying SARs and taking them off-site, I would put a stop to that pretty quick.
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#1475883 - 12/03/10 04:52 PM
Re: FinCEN: Confidentiality of SARs Final Rule
rlcarey
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Sweet Home AL
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In my prior life as a BSA auditor, I also operated as Randy and KB. I used codes or SAR dates/situation references if the bank didn't code the SARs. I also made a recommendation that going forward, all SARs be coded for tracking and discussion purposes to ensure confidentiality. Typically, coding was something like YYYY-MM-SAR No.
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#1487441 - 12/30/10 05:33 PM
Re: FinCEN: Confidentiality of SARs Final Rule
Retread
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Back to the new regs and guidance... I am struck by the fact that so much of it is focused on how banks should keep SARs confidential. I've never heard or read any anecdotes about banks disclosing SAR filings. However, verifiable stories about law enforcement blabbing away about SAR filings (including the IRS writing to people accused of structuring) abound.
Banks might best promote SAR confidentiality by starting every SAR narrative with:
The unauthorized disclosure of SARs by government employees (this means you, Gentle Reader) is a violation of federal law. Both civil and criminal penalties may be imposed for SAR disclosure violations. Violations may be enforced through civil penalties of up to $100,000 for each violation and criminal penalties of up to $250,000 and/or imprisonment not to exceed five years.
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#1489872 - 01/05/11 05:10 PM
Re: FinCEN: Confidentiality of SARs Final Rule
Princess Romeo
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Joined: Nov 2005
Posts: 383
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Ken, if you were filing SARs would you actually add this statement to the narrative? I think it's a great idea.
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#1489925 - 01/05/11 05:55 PM
Re: FinCEN: Confidentiality of SARs Final Rule
nemsi
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No, I was being a smart___ ; I don't want to put anyone in the position of defending my insolence.
Do I think it has more practical value than anything in the modified reg, yes. It's not the bankers who are disclosing the existence of SARs...
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In this world you must be oh so smart or oh so pleasant. Well, for years I was smart. I recommend pleasant.
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#1489961 - 01/05/11 06:27 PM
Re: FinCEN: Confidentiality of SARs Final Rule
Elwood P. Dowd
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Joined: Nov 2005
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Thanks Ken. I was hoping you would say "absolutely!" but being a loyal reader I knew that you were probably just expressing the frustrations that most of us feel when we read that a SAR filing was disclosed by IRS agent, etc..
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#1490253 - 01/05/11 09:51 PM
Re: FinCEN: Confidentiality of SARs Final Rule
nemsi
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Joined: Apr 2003
Posts: 1,636
snorkeling in warm, clear wate...
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Love it, Ken: "Gentle Reader" my aspidistra!!!  I can see modifying it though to remove the implied snarkiness and starting with: "The unauthorized disclosure of a SAR is a violation of federal law. Documentation listed below will be released only upon request of properly authorized and documented authorities". I think the best audience would be for the banks that run their SAR to a *choke* decisionning committee or *chokechokecough* copy it to the entire Board.
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#1493707 - 01/12/11 02:44 PM
Re: FinCEN: Confidentiality of SARs Final Rule
BSARocksagain
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Joined: Nov 2000
Posts: 2,701
PA
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There has always been a requirement for SAR confidentiality, so your BSA Program should definitely address it. You don't need to specifically mention this new rule as long as your BSA Program reflects the requirements.
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#1497978 - 01/20/11 08:33 PM
Re: FinCEN: Confidentiality of SARs Final Rule
Deena
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Junior Member
Joined: Oct 2010
Posts: 42
East Coast
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I work at an institution where we used to have in house legal counsel that would oversee the BSA officer (me) and on occasion assist with SAR investigations. The in house legal counsel quit and now we work with an outside counsel on retainer until we figure out if we will hire a new in house counsel. An investigation has begun that we would like counsel to review. It could come up that we are considering a SAR or it is likely based upon the information that is reviewed that a SAR is filed. Since the attoney has an "agency" realtionship to us, are we breaching the new SAR or old SAR confidentiality rules?
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