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June 19, 2007
FinCEN Issues Guidance Regarding Suspicious Activity Report Supporting Documentation and Requests by Law Enforcement for Financial Institutions to Maintain an Account
On June 13, 2007, the Financial Crimes Enforcement Network (FinCEN) issued two pieces of guidance that are applicable to FCM and IB Members. The first piece of guidance involves SAR supporting documentation. The second piece of guidance addresses situations where a law enforcement agency requests that a financial institution keep an account open. A brief summary of each follows.
SAR Supporting Documentation
This guidance addresses three issues related to SAR supporting documentation - providing the documentation to FinCEN, law enforcement agencies and other regulatory organizations; what constitutes supporting documentation; and when legal process is required for disclosure of supporting documentation.
FinCEN's guidance clarifies that when FinCEN or appropriate law enforcement and other regulatory agencies (including the CFTC and NFA) request the supporting documentation to a SAR, financial institutions (including FCMs and IBs) are required to provide that material. The guidance advises financial institutions that their AML program should include procedures to verify that the requestor is a representative of FinCEN or other appropriate agency.
The guidance also clarifies that "supporting documentation" refers to all documents or records that assisted a financial institution in making the determination that certain activity required a SAR filing. The guidance reminds financial institutions that they are required to maintain these documents and that the firm's AML procedures should describe the firm's method for maintaining these documents.
Finally, this guidance clarifies that the Right to Financial Privacy Act's requirements relating to disclosure of customer financial records (service of legal process, notice to the customer and an opportunity to challenge the disclosure) does not apply when a financial institution provides a copy of a SAR or SAR supporting documentation to FinCEN or other appropriate agency.
A full copy of this guidance may be viewed at http://www.fincen.gov/Supporting_Documentation_Guidance.html.
Requests by Law Enforcement to Maintain Accounts
The second piece of guidance addresses situations where a firm has an account with suspicious or potential criminal activity and law enforcement requests that the financial institution keep the account open. The guidance advises financial institutions that they should ask for a written request from the law enforcement agency. This request should be issued by a supervisory agent or by an attorney within a United States Attorney's Office or another office of the Department of Justice. If the request is made by a state or local law enforcement agency, the request should be from a supervisor of the state or local law enforcement agency or from an attorney within a state or local prosecutor's office. The request should indicate that the agency requested that the financial institution maintain the account and the purpose of the request. The request should also indicate the duration of the request, not to exceed six months (law enforcement may issue a subsequent request for a longer duration).
Although the Bank Secrecy Act does not have a recordkeeping requirement with respect to these requests, FinCEN advised financial institutions to maintain the request for at least 5 years after the request has expired.
A full copy of this guidance may be viewed at http://www.fincen.gov/Maintaining_Accounts_Guidance.html.
If you have any questions regarding this notice, please contact Sharon Pendleton, Director, Compliance at firstname.lastname@example.org or Carol Wooding, Assistant General Counsel, at email@example.com.