On 3/4/21, the Financial Action Task Force (FATF) released guidance titled “Guidance on Risk-Based Supervision” to help financial industry supervisors address the full spectrum of risks and focus resources where the risks are highest. In their release, FATF explains that a risk-based approach will make supervisors efforts to detect and prevent the financial flows that fuel crime and terrorism more effective. This is crucial, they explain, because it is better to detect and prevent money laundering and terrorist financing than to prosecute it after a crime has occurred.

Over the last few months, each of the federal regulators (FDIC, NCUA, OCC, and Federal Reserve) have issued proposals that would permit an exemption from the SAR reporting requirements. Upon first glance, it may appear to some that SARs are no longer required by financial institutions. This, however, is not the case.

On 2/24/2021, the Financial Crimes Enforcement Network (FinCEN) issued Advisory FIN-2021-A002 that discusses detecting, and reporting financial crimes related to Economic Impact Payments. The advisory contains descriptions of EIP fraud, 14 associated red flag indicators, and information on reporting suspicious activity, and is part of a series published by FinCEN on COVID-19-related frauds and criminal activity.

On 1/19/2021, the FDIC, Federal Reserve, FinCEN, NCUA, and OCC jointly issued responses to frequently asked questions (FAQs) regarding suspicious activity reporting and other AML considerations for financial institutions that are required to submit Suspicious Activity Reports (SARs).

On 1/15/2021, FinCEN issued a “Notice of Proposed Rulemaking; Reopening of Comment Period” to allow more time for comments to be received from their December 23, 2020 Notice of Proposed Rulemaking which requested feedback for potential new rules on certain transactions involving convertible virtual currency or digital assets with legal tender status. The comment period is reopened for 15 days for comments on the proposed reporting requirements and for 45 days for comments on the proposed requirements to report counterparty information and the proposed recordkeeping requirements. Written comments are now therefore due with respect to the proposed reporting requirements (except with respect to reporting of counterparty information) on February 1, 2021, and with respect to all other aspects of the proposed rule on March 1, 2021.

On 1/15/21, the Financial Crimes Enforcement Network (FinCEN) announced that Capital One was assessed a $390,000,000 civil money penalty for engaging in both “willful and negligent violations of the Bank Secrecy Act (BSA) and its implementing regulations.” According to their release, FinCEN determined and Capital One admitted to willfully failing to implement and maintain an effective Anti-Money Laundering (AML) program to guard against money laundering. Capital One also admitted that it willfully failed to file thousands of suspicious activity reports (SARs), and negligently failed to file thousands of Currency Transaction Reports (CTRs), with respect to a particular business unit known as the Check Cashing Group.