A pilot program has been proposed by FinCEN that permits certain financial institutions to share Suspicious Activity Reports aligning with Section 6212(a) of the Anti-Money Laundering Act of 2020.
Under the proposed rule, financial institutions with SARs reporting obligations have to share SARs data with their subsidiaries, foreign branches, and affiliates to combat illicit finance risk.
The regulation will enable the federal & state law enforcement mechanisms to limit the sharing of SARs and information related to these reports.
The intelligence community’s potential concerns have been considered in the formulation of the rule. As such, all privacy standards will be maintained so that there is no personal data breach.
Note that the pilot program does not apply to all the foreign branches of a financial institution. It will largely exclude the sharing of SARs with foreign affiliates in the Russian Federation and the People’s Republic of China. The SARs will also not be shared with any jurisdiction subject to United States sanctions, a state sponsor of terrorism, or that the Secretary of the Treasury has determined cannot reasonably protect the security of SARs & SARs information.
The Secretary may make exceptions to this prohibition on a case-by-case basis by notifying the House Committee on Financial Services and the Senate Committee on Banking, Housing, and Urban Affairs that such an exception is in the national security interest of the United States.
Every quarter, participating financial institutions need to report certain information to FinCEN: the total number of SARs and SARs information shared & the name and jurisdiction of every entity that received this information. Besides, the report must include these details:
Such entities wishing to participate should apply and establish particular compliance requirements. That is because the nature of the information given in SARs is sensitive. Hence, a formal application and approval process is crucial to establish adequate safeguards.