FinCEN described the criteria it considers when deciding whether to bring an enforcement action under the Bank Secrecy Act ("BSA").
In its statement, FinCEN emphasized that it will bring an enforcement action only where there has been a violation of statutes or regulations and that it will not bring an enforcement action based on noncompliance with standards of conduct that are set out only in regulatory guidance.
FinCEN said it considers both compliance with the registration, recordkeeping and reporting requirements of the BSA, and the sufficiency of a firm's AML program. In addition, FinCEN said it considers the following factors when evaluating how to proceed:
- the nature and gravity of the violations;
- the impact of the violations on FinCEN's efforts to protect the financial system and promote national security;
- the pervasiveness of the violations and any complicity of management;
- a firm's prior history of misconduct;
- any financial gain resulting from the violations;
- whether the firm took prompt corrective action upon discovery of the violations;
- whether the firm timely and voluntarily disclosed the violations;
- the quality and extent of cooperation with FinCEN, including with regard to wrongdoing by directors, officers and employees;
- the degree to which the violations are systemic; and
- any enforcement actions taken by other agencies for related activity.
FinCEN's statement was issued shortly after the release of a joint statement on the same subject by the Federal Reserve Board, the FDIC, the National Credit Union Administration and the OCC (see previous coverage).
Commentary
Following on the heels of last week's joint statement on enforcement by the Federal Reserve Board, FDIC, National Credit Union Administration and OCC, FinCEN's enforcement policy description is notable for several reasons. First, it underscores FinCEN's role in BSA enforcement as "administrator of the BSA" and that Federal functional regulators (such as those that issued last week's statement) merely "may" have their own enforcement authority.
Second, FinCEN makes explicit its authority to take enforcement action against individuals associated with financial institutions. Among the factors FinCEN considers is whether a financial institution cooperates with FinCEN "as to potential wrongdoing by its directors, officers [and] employees" - a statement that calls to mind the Department of Justice's policies on individual accountability for corporate wrongdoing.
Third, FinCEN places very few limitations on its ability to enforce violations. Financial institutions (and their directors, officers and employees) should bear in mind that BSA enforcement does not end with their Federal functional regulators; FinCEN's BSA enforcement authority, which the agency interprets broadly, may be exercised independently.
Primary Sources
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