Federal Register: December 23, 2004 (Volume 69, Number 246)
DOCID: FR Doc 04-27739
DEPARTMENT OF THE TREASURY
Treasury Department
CFR Citation: 31 CFR Part 103
NOTICE: RULES
ACTION: Currency and foreign transactions; financial reporting and recordkeeping requirements:
DOCUMENT ACTION: Final rule; interpretive release.
SUBJECT CATEGORY:
Interpretive Release No. 2004-02--Unitary Filing of Suspicious Activity and Blocking Reports
DATES: This final rule is effective December 23, 2004. The DATES section of the rule published on December 14, 2004, at 69 FR 74439 is corrected to read as follows:
DOCUMENT SUMMARY:
This FinCEN interpretive guidance clarifies that reports filed with the Department of the Treasury's Office of Foreign Assets Control (``OFAC'') of blocked transactions with Specially Designated Global Terrorists, Specially Designated Terrorists, Foreign Terrorist Organizations, Specially Designated Narcotics Trafficker Kingpins, and Specially Designated Narcotics Traffickers will be deemed by FinCEN to fulfill the requirement to file suspicious activity reports on such transactions for purposes of FinCEN's suspicious activity reporting rules. However, the filing of a blocking report with OFAC will not be deemed to satisfy a financial institution's obligation to file a suspicious activity report if the transactions would be reportable under FinCEN's suspicious activity reporting rules even if there were no OFAC match. Moreover, to the extent that the financial institution is in possession of information not included on the blocking report filed with OFAC, a separate suspicious activity report should be filed with FinCEN including that information.
SUMMARY:
Suspicious activity and blocking reports; filing requirements,
SUPPLEMENTAL INFORMATION
FinCEN is publishing this interpretation to clarify that the filing of required blocking reports with OFAC on transactions involving an individual or entity designated as a Specially Designated Global Terrorist, Specially Designated Terrorist, Foreign Terrorist Organization, Specially Designated Narcotics Trafficker Kingpin, or Specially Designated Narcotics Trafficker shall be deemed to satisfy the requirement, under existing and any forthcoming suspicious activity reporting regulations, that financial institutions file suspicious activity reports based on the fact of such a match.
List of Subjects in 31 CFR Part 103
Authority delegations (government agencies), Banks, Banking,
Currency, Investigations, Reporting and recordkeeping requirements. Department of the Treasury
1 CFR Chapter I
Authority and Issuance
For the reasons set forth in the preamble, part 103 of title 31 of the Code of Federal Regulations is amended as follows:
PART 103FINANCIAL RECORDKEEPING AND REPORTING OF CURRENCY AND FOREIGN TRANSACTIONS
1. The authority citation for part 103 continues to read as follows:
Authority: 12 U.S.C. 1829b and 19511959; 31 U.S.C. 53115314
and 53165332; title III, sec. 312, 313, 314, 319, 326, 352. Pub. L. 10756, 115 Stat. 307, 21 U.S.C. 1786(q).
2. Part 103 is amended by adding a new Intrepretive Release at the end of Appendix C to read as follows:
APPENDIX C TO PART 103INTERPRETIVE RULES
* * * * *
Release No. 200402
This FinCEN interpretive guidance clarifies that reports filed
with the Department of the Treasury's Office of Foreign Assets
Control (``OFAC'') of blocked transactions with Specially Designated
Global Terrorists, Specially Designated Terrorists, Foreign
Terrorist Organizations, Specially Designated Narcotics Trafficker
Kingpins, and Specially Designated Narcotics Traffickers will be
deemed by FinCEN to fulfill the requirement to file suspicious
activity reports on such transactions for purposes of FinCEN's
suspicious activity reporting rules. However, the filing of a
blocking report with OFAC will not be deemed to satisfy a financial
institution's obligation to file a suspicious activity report if the
transactions would be reportable under FinCEN's suspicious activity
reporting rules even if there were no OFAC match. Moreover, to the extent that the financial institution is in possession of
information not included on the blocking report filed with OFAC, a
separate suspicious activity report should be filed with FinCEN including that information.
Background
The Bank Secrecy Act authorizes the Secretary of the Treasury to require financial institutions to report ``any suspicious
transaction relevant to a possible violation of law or regulation.''
\1\ Under this authority, FinCEN has issued regulations requiring
banks, securities brokerdealers, introducing brokers, casinos,
futures commission merchants, and money services businesses, to report suspicious activity that meets a particular dollar
threshold.\2\ Each rule includes filing procedures requiring that a
suspicious transaction shall be reported by completing a suspicious
activity report and filing it with FinCEN in a central location to
be determined by FinCEN. Generally, the rules provide a financial
institution with thirty days from the date of the initial detection
of suspicious activity to file a report, with an additional thirty
days if the financial institution is unable to identify a suspect.
Reports are filed on forms developed for each industry subject to the reporting requirement.\3\
\1\ See 31 U.S.C. 5318(g)(1).
\2\ See 31 CFR 103.1721. The threshold for most financial
institutions is $5,000; transactions conducted at points of sale for
money services businesses have a reporting threshold of $2,000. See 31 CFR 103.20.
\3\ See TD F 9022.47 (depository institutions); TD F 22.56
(money services businesses); FinCEN Form 101 (securities and futures industries); FinCEN Form 102 (casinos and card clubs).
OFAC administers and enforces economic and trade sanctions based
on U.S. foreign policy and national security goals against targeted
foreign countries, terrorists, international narcotics traffickers,
and those engaged in activities related to the proliferation of
weapons of mass destruction. OFAC's Reporting, Procedures and
Penalties Regulations at 31 CFR part 501 require U.S. financial
institutions to block and file reports on accounts, payments, or
transfers in which an OFACdesignated country, entity, or individual
has any interest.\4\ These reports must be filed with OFAC within ten business days of the blocking of the property.\5\
\4\ 31 CFR 501.603.
\5\ 31 CFR 501.603(b)(1)(i).
Prior Guidance
Transactions involving an individual or entity designated on
OFAC's list of Specially Designated Nationals and Blocked Persons as
a global terrorist, terrorist, terrorist organization, narcotics
trafficker, or narcotics kingpin \6\ may be in furtherance of a
criminal act, and therefore relevant to a possible violation of law.
Thus, blocking reports related to such persons also describe [[Page 76848]]
potentially suspicious activity. In the November 2003 edition of its ``SAR Activity Review,'' \7\ FinCEN instructed financial
institutions to file suspicious activity reports on verified matches
of persons designated by OFAC. While this guidance ensured that the
relevant information would be available to law enforcement, it also
resulted in financial institutions being required to make two
separate filings with the Department of the Treasuryone with OFAC
pursuant to its Reporting, Procedures and Penalties Regulations, and
one with FinCEN pursuant to its suspicious activity reporting rules.
\6\ The specific designations are as follows: Specially
designated terrorist; foreign terrorist organization; specially
designated global terrorist; specially designated narcotics
trafficker; specially designated narcotics trafficker kingpin. See
31 CFR parts 595, 597, 598 and the Foreign Narcotics Kingpin Act, 21
U.S.C. 190108, 8 U.S.C. 1182. These categories of designations are subject solely to blocking requirements.
\7\ Issue 6 (Nov. 2003).
Revised Guidance
FinCEN is hereby revising its prior guidance to eliminate the need for duplicative reporting in cases where a financial
institution identifies a verified match with individuals or entities designated by OFAC. As of the date of publication of this
interpretation, FinCEN will deem its rules requiring the filing of
suspicious activity reports to be satisfied by the filing of a
blocking report with OFAC in accordance with OFAC's Reporting,
Penalties and Procedures Regulations. OFAC will then provide the
information to FinCEN for inclusion in the suspicious activity reporting database where it will be made available to law
enforcement. This construction of the suspicious activity reporting
rules will serve the public interest by enabling FinCEN to obtain
and provide potentially important information about terrorists and
major drug traffickers to law enforcement on an expedited basis
without imposing duplicative reporting burdens on the regulated industry.
Accordingly, a financial institution that files a blocking
report with OFAC due to the involvement in a transaction or account
of a person designated as a Specially Designated Global Terrorist, a
Specially Designated Terrorist, a Foreign Terrorist Organization, a
Specially Designated Narcotics Trafficker Kingpin, or a Specially Designated Narcotics Trafficker, shall be deemed to have
simultaneously filed a suspicious activity report on the fact of the
match with FinCEN, in satisfaction of the requirements of the
applicable suspicious activity reporting rule. This interpretation
does not affect a financial institution's obligation to identify and
report suspicious activity beyond the fact of the OFAC match. To the extent that the financial institution is in possession of
information not included on the blocking report filed with OFAC, a
separate suspicious activity report should be filed with FinCEN
including that information. This interpretation also does not affect
a financial institution's obligation to file a suspicious activity
report even if it has filed a blocking report with OFAC, to the
extent that the facts and circumstances surrounding the OFAC match
are independently suspiciousand are otherwise required to be
reported under existing FinCEN regulations. In those cases, the OFAC
blocking report would not satisfy a financial institution's suspicious activity report filing obligation.
Further, nothing in this interpretation is intended to preclude
a financial institution from filing a suspicious activity report to
disclose additional information concerning the OFAC match,\8\ nor
does it preclude a financial institution from filing a suspicious
activity report if the financial institution has reason to believe
that terrorism or drug trafficking is taking place, even though
there is no OFAC match. Finally, this interpretation does not apply
to blocking reports filed to report transactions and accounts
involving persons owned by, or who are nationals of, countries
subject to OFACadministered sanctions programs. Such transactions
should be reported on suspicious activity reports under the
suspicious activity reporting rules if, and only, if, the activity
itself appears to be suspicious under the criteria established by the suspicious activity reporting rules.
\8\ Such a report would be a voluntary report under the statute
and regulations. See 31 U.S.C. 5318(g)(3) (extending safe harbor protection from civil liability to voluntary filings).
William J. Fox,
Director.
[FR Doc. 0427739 Filed 122204; 8:45 am]
BILLING CODE 481002P
FOR FURTHER INFORMATION CONTACT
Regulatory Policy and Programs Division, 18009492732, Financial Crimes Enforcement Network.