The Financial Crimes Enforcement Network ("FinCEN") has continued a spate of regulatory activity related to financial crimes compliance matters in the first year of the Biden Administration,1 recapped in its recent report detailing progress in the first 180 days since Congress' passage of the Anti-Money Laundering Act of 2020 (the "AML Act").2 Of note, in late June 2021, FinCEN announced the completion of two key deliverables required by the AML Act:

  • First, FinCEN's report determining it may undertake rulemaking to create a no-action letter issuance process in at least some form, despite practical challenges involved in the endeavor.3
  • Second, FinCEN's establishment of national policy priorities within anti-money laundering ("AML") and counter-financing of terrorism ("CFT").4

These developments carry important implications for financial institutions. For example, a noaction letter process could pave a new avenue for obtaining clearer, potentially precedential guidance from FinCEN on a more abbreviated timeline than is available through requests for administrative rulings or exceptive or exemptive relief. Financial institutions potentially stand to gain from commenting in FinCEN's rulemaking process, whether individually, or in partnership with industry associations, by shaping the potential no-action letter process in a manner responsive to concerns of financial institutions.

Financial institutions would also be wise to begin promptly reassessing AML and CFT compliance programs in light of FinCEN's national policy priorities, as FinCEN and the federal banking and securities regulators will expect appropriate enhancements where warranted. Financial institutions should especially ensure their AML/CFT compliance programs' functions to detect and report suspicious activity are able to internalize the priorities FinCEN has highlighted.

WilmerHale regularly advises leading financial institutions on developments in the AML/CFT regulatory environment. We are available to advise clients on potential engagement with government agencies involving pending regulations such as a novel no-action letter process, and on appropriate enhancements to compliance programs in the wake of FinCEN's published priorities.

FinCEN Will Institute a No-Action Letter Program

FinCEN has determined that it may be feasible to "establish a no-action letter process through rulemaking" while noting practical caveats, especially that "sufficient resources" must be made available to render such a process practical.5 The no-action letter process may also provide financial institutions a path to obtaining FinCEN's consent before launching the innovative approaches to financial crimes compliance that FinCEN has recently hailed.6 All financial institutions-especially those contemplating changes to their AML compliance programs (e.g., a novel approach to transaction monitoring)-may avail themselves of such a process. However, it could be especially beneficial for fintech companies seeking no-action relief, such as those wishing to understand if they are engaged in money transmission. Although the federal banking and securities regulators would likely not be bound by these determinations, FinCEN is the agency charged with interpreting the Bank Secrecy Act ("BSA"), so its views are likely to carry significant weight.

Footnotes

1 See Press Release, FinCEN, Message from the FinCEN Director: 180-Day Update on AML Act Implementation (June 30, 2021), https://www.fincen.gov/news/news-releases/message-fincen-director-180- day-update-aml-act-implementation; Press Release, FinCEN, FinCEN Statement on Financial Crimes Tech Symposium (Feb. 4, 2021), https://www.fincen.gov/news/news-releases/fincen-statement-financial-crimes-tech-symposium; FinCEN, FIN-2021-NTC2, FinCEN Informs Financial Institutions of Efforts Related to Trade in Antiquities and Art (Mar. 9, 2021), https://www.fincen.gov/sites/default/files/2021- 03/FinCEN%20Notice%20on%20Antiquities%20and%20Art_508C.pdf; Press Release. FinCEN, FinCEN Exchange Brings Together Public and Private Stakeholders to Discuss Bank Secrecy Act Suspicious Activity Reporting Statistics (Mar. 23, 2021), https://www.fincen.gov/news/news-releases/fincen-exchange-brings-together-public-and-private-stakeholders-discuss-bank; FinCEN, Innovation Honors Program: Emerging Themes and Future Role in AML Act Implementation (Mar. 2021), https://www.fincen.gov/sites/default/files/2021- 03/FinCEN%20IH%20Prgm%20Public%20Report%20508C.pdf; Press Release, FinCEN, FinCEN Launches Regulatory Process for New Beneficial Ownership Reporting Requirement (Apr. 1, 2021), https://www.fincen.gov/news/news-releases/fincen-launches-regulatory-process-new-beneficial-ownership-reporting.

2 More information about AML developments can be found in a related WilmerHale client alert. WilmerHale, 2021 AML Trends and Developments (Feb. 11, 2021), https://www.wilmerhale.com/en/insights/client-alerts/20210211-2021-aml-trends-and-developments.

3 FinCEN, A Report to Congress: Assessment of No-Action Letters in Accordance with Section 6305 of the Anti-Money Laundering Act of 2020 (June 28, 2021) [hereinafter FinCEN No-Action Letter Assessment], https://www.fincen.gov/sites/default/files/shared/No-Action%20Letter%20Report%20to%20Congress%20per%20AMLA%20for%20ExecSec%20Clearance%20508.pdf

4 See FinCEN, Anti-Money Laundering and Countering the Financing of Terrorism National Priorities (June 30, 2021) [hereinafter FinCEN Priorities], https://www.fincen.gov/sites/default/files/shared/AML_CFT%20Priorities%20(June%2030%2C%202021).pdf.

5 FinCEN No-Action Letter Assessment, supra note 3, at 14.

6 See generally 2021 AML Trends and Developments, supra note 2.

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