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FinCEN Looks to Expand Data Sharing to Fight International Fintech Crime Featured

The Financial Crimes Enforcement Network (FinCEN) is taking the first steps to launch an expansion of an international data sharing program aimed at combating money laundering and other financial crimes.

As such, the oversight body issued a formal Notice of Proposed Rulemaking (NPRM) to facilitate public comment on the initiative. Ultimately, the network is planning to establish a “limited-duration pilot program,” allowing financial institutions to share “suspicious activity reports” as prescribed by Section 6212 of the Anti-Money Laundering Act of 2020.

“This NPRM builds on the experience that FinCEN has gained in administering existing pilot programs and once finalized, will assist financial institutions in further combating illicit finance risks. We expect that the pilot program will provide valuable feedback to FinCEN as longer-term approaches towards [suspicious activity reports] sharing with foreign affiliates are considered,” said FinCEN Acting Director Himamauli Das.

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According to FinCEN, the agency’s priorities with respect to enforcing anti-laundering federal law include cybercrime, digital currencies, terrorism financing, drug trafficking and human trafficking, among others. “We urge stakeholders to provide input to assist us in developing a program that will help combat illicit finance risks and promote enterprise-wide risk management, while ensuring adequate safeguards are in place to protect [suspicious activity reports] confidentiality,” Das added.

Under the pilot program, financial institutions that fall within the guidelines of suspicious report filing would be permitted to share information with relevant foreign branches, affiliates and subsidiaries in order to combat illicit financial activity. The proposal, though, does take into account state and federal statutory limitations, intelligence concerns and the “confidentiality of personally identifiable information,” reads the announcement.

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The American Bankers Association indicated a willingness to work with FinCEN regarding the new program, but warned that proper confidentially controls must be observed in order for the program to be effective. “ABA has long supported [suspicious activity reports] information sharing between banks, and we look forward to working with FinCEN and our members to help make the new pilot program a success,” according to a statement from the American Bankers Association. “Although important steps must be taken to maintain [the reports’] confidentiality, we believe the program will make it easier and more efficient to fight fraud and illicit finance while allowing banks to better manage enterprise-wide risk.”

Previously, suspicious activity sharing was limited to internal communication with domestic affiliates, foreign head offices and controlling companies, notes the bankers’ trade group.

Input is expected to deal with the technical challenges associated with expanding sharing beyond those guidelines as well as the costs and benefits of expanding sharing and confidentiality considerations, it adds.

According to information from FinCEN, public comments should be provided by Monday, March 28, 2022.

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