Proposed Rulemaking to Permit Additional Exemptions to Suspicious Activity Report Requirements

6580

Federal Register / Vol. 86, No. 13 / Friday, January 22, 2021 / Proposed Rules

13 12 U.S.C. 4802(a).

14 12 U.S.C. 4802(b).

the Board’s granting of relief to a bank

seeking relief from the requirements of

the Board’s SAR regulations, when such

relief would be beneficial from a safety-

and-soundness and anti-money

laundering regulatory perspective. The

proposed rule would be issued pursuant

to the Board’s safety-and-soundness

authority over supervised institutions.

The proposed rule will apply to small

bank holding companies and their

nonbank subsidiaries and small state

member banks as well as Edge and

agreement corporations, and U.S. offices

of foreign banking organizations

supervised by the Federal Reserve. The

Board does not expect that the proposal

would impose a significant cost on

small banking organizations due to

compliance, recordkeeping, and

reporting updates from this proposal.

The Board does not believe that the

proposal would result in any significant

economic impact on banking

organizations as there are no projected

recordkeeping, reporting, or other

compliance requirements associated

with the proposal. Moreover, the

proposal does not impose any new

requirements on banking organization,

as applying for an exemption under the

proposal would be entirely voluntary. In

addition, the Board is not aware of any

federal rules that duplicate, overlap, or

conflict with the proposed rule. For

these reasons, the Board believes that

the proposed rule will not have a

significant economic impact on a

substantial number of small entities

supervised by the Board, and believes

that there are no significant alternatives

to the proposed rule that would reduce

the economic impact on small banking

organizations supervised by the Board.

D

overlap, or

conflict with the proposed rule. For

these reasons, the Board believes that

the proposed rule will not have a

significant economic impact on a

substantial number of small entities

supervised by the Board, and believes

that there are no significant alternatives

to the proposed rule that would reduce

the economic impact on small banking

organizations supervised by the Board.

D. Riegle Community Development and

Regulatory Improvement Act of 1994

Pursuant to section 302(a) of the

Riegle Community Development and

Regulatory Improvement Act (RCDRIA),

in determining the effective date and

administrative compliance requirements

for new regulations that impose

additional reporting, disclosure, or other

requirements on insured depository

institutions, each federal banking

agency must consider, consistent with

principles of safety and soundness and

the public interest, any administrative

burdens that such regulations would

place on insured depository institutions,

including small depository institutions,

and customers of depository

institutions, as well as the benefits of

such regulations.13 In addition, section

302(b) of RCDRIA requires new

regulations and amendments to

regulations that impose additional

reporting, disclosures, or other new

requirements on insured depository

institutions generally to take effect on

the first day of a calendar quarter that

begins on or after the date on which the

regulations are published in final

form.14 The proposed rule would not

impose additional reporting, disclosure,

or other requirements; therefore the

requirements of the RCDRIA do not

apply.

However, the agencies invite

comments that further will inform the

agencies’ consideration of RCDRIA.

List of Subjects in 12 CFR Part 208

Accounting, Agriculture, Banks,

Banking, Confidential business

information, Consumer protection,

Crime, Currency, Federal Reserve

System, Flood insurance, Insurance,

Investments, Mortgages, Reporting and

recordkeeping requirements, Securities

apply.

However, the agencies invite

comments that further will inform the

agencies’ consideration of RCDRIA.

List of Subjects in 12 CFR Part 208

Accounting, Agriculture, Banks,

Banking, Confidential business

information, Consumer protection,

Crime, Currency, Federal Reserve

System, Flood insurance, Insurance,

Investments, Mortgages, Reporting and

recordkeeping requirements, Securities.

Authority and Issuance

For the reasons stated in the

preamble, the Board of Governors of the

Federal Reserve System proposes to

amend 12 CFR part 208 as follows:

PART 208—MEMBERSHIP OF STATE

BANKING INSTITUTIONS IN THE

FEDERAL RESERVE SYSTEM

(REGULATION H)

■1. The authority citation for part 208

continues to read as follows:

Authority: 12 U.S.C. 24, 36, 92a, 93a,

248(a), 248(c), 321–338a, 371d, 461, 481–486,

601, 611, 1814, 1816, 1817(a)(3), 1817(a)(12),

1818, 1820(d)(9), 1833(j), 1828(o), 1831,

1831o, 1831p–1, 1831r–1, 1831w, 1831x,

1835a, 1882, 2901–2907, 3105, 3310, 3331–

3351, 3905–3909, 5371, and 5371 note; 15

U.S.C. 78b, 78I(b), 78l(i), 780–4(c)(5), 78q,

78q–1, 78w, 1681s, 1681w, 6801, and 6805;

31 U.S.C. 5318; 42 U.S.C. 4012a, 4104a,

4104b, 4106, and 4128.

■2. In § 208.62, add a new paragraph (l)

to read as follows:

§ 208.62

Suspicious activity reports.

*

*

*

*

*

(l) Exemptions.

(1)(i) The Board may exempt any

member bank from the requirements of

this section. Upon receiving a written

request from a member bank, the Board

will consider whether the exemption is

consistent with safe and sound banking

and may consider other appropriate

factors. The Board also would seek

FinCEN’s determination whether the

exemption is consistent with the

purposes of the Bank Secrecy Act, if

applicable. The exemption shall be

applicable only as expressly stated in

the exemption, may be conditional or

unconditional, may apply to particular

persons or classes of persons, and may

apply to transactions or classes of

transactions.

propriate

factors. The Board also would seek

FinCEN’s determination whether the

exemption is consistent with the

purposes of the Bank Secrecy Act, if

applicable. The exemption shall be

applicable only as expressly stated in

the exemption, may be conditional or

unconditional, may apply to particular

persons or classes of persons, and may

apply to transactions or classes of

transactions.

(ii) The Board will seek FinCEN’s

concurrence with regard to any

exemption request that would also

require an exemption from FinCEN’s

SAR regulations, and may consult with

FinCEN regarding other exemption

requests. The Board also may consult

with the other state and federal banking

agencies and consider comments before

granting any exemption.

(2) The Board will provide a written

response to the member bank that

submitted the exemption request after

considering whether the exemption is

consistent with safe and sound banking,

consulting with the appropriate

agencies, and seeking concurrence when

appropriate. A member bank that has

received an exemption under paragraph

(1) of this section may rely on the

exemption for a period of time to be

communicated by the Board in its

granting of the exemption, which may

be indefinite.

(3) The Board may extend the period

of time or may revoke an exemption

granted under paragraph (1) of this

section. Exemptions may be revoked at

the sole discretion of the Board. The

Board will provide written notice to the

member bank of the Board’s intention to

revoke an exemption. Such notice will

include the basis for the revocation and

will provide an opportunity for the

member bank to submit a response to

the Board. The Board will consider the

response prior to deciding whether to

revoke an exemption, and will notify

the member bank of the Board’s final

decision to revoke an exemption in

writing.

By order of Board of Governors of the

Federal Reserve System.

Ann Misback,

Secretary of the Board.

[FR Doc

evocation and

will provide an opportunity for the

member bank to submit a response to

the Board. The Board will consider the

response prior to deciding whether to

revoke an exemption, and will notify

the member bank of the Board’s final

decision to revoke an exemption in

writing.

By order of Board of Governors of the

Federal Reserve System.

Ann Misback,

Secretary of the Board.

[FR Doc. 2021–00033 Filed 1–21–21; 8:45 am]

BILLING CODE 6210–01–P

FEDERAL DEPOSIT INSURANCE

CORPORATION

12 CFR Part 353

RIN 3064–AF56

Exemptions to Suspicious Activity

Report Requirements

AGENCY: Federal Deposit Insurance

Corporation.

ACTION: Notice of proposed rulemaking.

SUMMARY: The FDIC is inviting comment

on a proposed rule that would modify

VerDate Sep<11>2014

16:14 Jan 21, 2021

Jkt 253001

PO 00000

Frm 00009

Fmt 4702

Sfmt 4702

E:\FR\FM\22JAP1.SGM

22JAP1

jbell on DSKJLSW7X2PROD with PROPOSALS

6581

Federal Register / Vol. 86, No. 13 / Friday, January 22, 2021 / Proposed Rules

1 The FDIC first codified this requirement in 1986

at 12 CFR part 353 (1986), which required FDIC

insured state non-member banks to report

‘‘apparent violation[s]’’ of federal criminal law. 51

FR 16485, 16486 (May 5, 1986).

2 Public Law 102–550, 106 Stat. 3672 (Oct. 28,

1992).

3 31 U.S.C. 5318(g)(1). The quoted text is from

section 1517 of the Annunzio-Wylie Anti-Money

Laundering Act, which was originally codified at 31

U.S.C. 5314(g). The text was moved as part of the

Violent Crime Control and Law Enforcement Act of

1994.

4 FinCEN is the Administrator of the Bank

Secrecy Act.

5 61 FR 4326 (Feb. 5, 1996). Prior to the adoption

of FinCEN’s SAR regulation in 1996 and the

accompanying revisions to the FDIC’s regulation,

the FDIC’s criminal referral regulation had no

specific provision requiring the reporting of money

laundering transactions. See footnote 1. However,

the FDIC’s criminal referral regulation prior to the

SAR regulation broadly encompassed money

laundering and structuring transactions

r to the adoption

of FinCEN’s SAR regulation in 1996 and the

accompanying revisions to the FDIC’s regulation,

the FDIC’s criminal referral regulation had no

specific provision requiring the reporting of money

laundering transactions. See footnote 1. However,

the FDIC’s criminal referral regulation prior to the

SAR regulation broadly encompassed money

laundering and structuring transactions. See 58 FR

28757, 28772 (May 17, 1993).

6 61 FR 6095 (Feb. 16, 1996) (FDIC); 61 FR 6100

(Feb. 16, 1996) (OTS); 61 FR 4326 (Feb. 5, 1996)

(FinCEN).

7 See 12 CFR part 353; 31 CFR 1020.320(a)(2).

the requirements for FDIC-supervised

institutions to file Suspicious Activity

Reports (SARs). The proposed rule

would amend the FDIC’s SAR regulation

to allow the FDIC to issue exemptions

from the SAR requirements. The

proposed rule would make it possible

for the FDIC to grant relief to FDIC-

supervised institutions that develop

innovative solutions to meet Bank

Secrecy Act (BSA) requirements more

efficiently and effectively.

DATES: Comments are due on or before

February 22, 2021. Comments on the

Paperwork Reduction Act burden

estimates are due on or before March 23,

2021.

ADDRESSES: You may submit comments,

identified by RIN 3064–AF56, by any of

the following methods:

• FDIC Website: https://

www.fdic.gov/regulations/laws/federal/.

Follow instructions for submitting

comments on the agency website.

• FDIC Email: Comments@fdic.gov.

Include RIN 3064–AF56 on the subject

line of the message.

• Mail: Robert E. Feldman, Executive

Secretary, Attention: Comments, Federal

Deposit Insurance Corporation, 550 17th

Street NW, Washington, DC 20429.

• Hand Delivery/Courier: Comments

may be hand-delivered to the guard

station at the rear of the 550 17th Street

building (located on F Street) on

business days between 7 a.m. and 5 p.m.

Please include your name, affiliation,

address, email address, and telephone

number(s) in your comment

Attention: Comments, Federal

Deposit Insurance Corporation, 550 17th

Street NW, Washington, DC 20429.

• Hand Delivery/Courier: Comments

may be hand-delivered to the guard

station at the rear of the 550 17th Street

building (located on F Street) on

business days between 7 a.m. and 5 p.m.

Please include your name, affiliation,

address, email address, and telephone

number(s) in your comment. All

statements received, including

attachments and other supporting

materials, are part of the public record

and are subject to public disclosure.

You should submit only information

that you wish to make publicly

available.

Please note: All comments received

will be posted generally without change

to http://www.fdic.gov/regulations/laws/

federal, including any personal

information provided.

FOR FURTHER INFORMATION CONTACT: Lisa

Arquette, Associate Director, (202) 898–

8633, larquette@fdic.gov, Division of

Risk Management Supervision; John

Dorsey, Acting Supervisory Counsel,

(202) 898–3807, jdorsey@fdic.gov, Legal

Division; or Constantine Lizas, Counsel,

(202) 898–6925, clizas@fdic.gov, Legal

Division.

SUPPLEMENTARY INFORMATION:

I. Policy Objectives

The policy objective of the proposed

rule is to allow the FDIC to grant SAR

filing exemptions, in conjunction with

the Financial Crimes Enforcement

Network of the Department of the

Treasury (FinCEN), to FDIC-supervised

institutions that develop innovative

solutions to meet BSA requirements

more efficiently and effectively. The

FDIC is proposing this rule as a

proactive measure to address the

likelihood that FDIC-supervised

institutions will leverage existing or

future technologies to report

information concerning suspicious

activity in a different manner or time

frame or to share SAR-related

information. This change would more

closely align the FDIC’s regulation with

FinCEN’s regulation. FinCEN, unlike the

FDIC, has broad statutory authority to

issue exemptions from the SAR filing

requirements

-supervised

institutions will leverage existing or

future technologies to report

information concerning suspicious

activity in a different manner or time

frame or to share SAR-related

information. This change would more

closely align the FDIC’s regulation with

FinCEN’s regulation. FinCEN, unlike the

FDIC, has broad statutory authority to

issue exemptions from the SAR filing

requirements. Because the FDIC’s SAR

regulations do not currently contain any

provision by which the FDIC can issue

case-by-case exemptions, a situation

could arise in which FinCEN grants an

exemption from the SAR filing

requirements to an FDIC-supervised

institution, but the institution would

still need to file a SAR if the

circumstance fell within the FDIC’s SAR

rule. The proposed rule would allow the

FDIC to grant exemptions from SAR

filing requirements in conjunction with

FinCEN to reduce potential regulatory

burden when a request involves the

SAR filing requirements of both FinCEN

and the FDIC.

II. Background

The FDIC has long required its

supervised institutions to report

potential violations of law arising from

transactions that flow through those

institutions. From 1986 to 1996, FDIC-

supervised institutions filed criminal

referral forms with the FDIC, Federal

Bureau of Investigation, and the local

U.S. Attorney’s office.1 The FDIC

required reporting through criminal

referral forms to facilitate the reporting

of potential violations to law

enforcement

potential violations of law arising from

transactions that flow through those

institutions. From 1986 to 1996, FDIC-

supervised institutions filed criminal

referral forms with the FDIC, Federal

Bureau of Investigation, and the local

U.S. Attorney’s office.1 The FDIC

required reporting through criminal

referral forms to facilitate the reporting

of potential violations to law

enforcement.

In 1992, Congress passed the

Annunzio-Wylie Anti-Money

Laundering Act, which redesigned the

criminal referral process applicable to

FDIC-supervised institutions and made

the reporting of certain suspicious

transactions a requirement of the BSA.2

The Annunzio-Wylie Anti-Money

Laundering Act permitted the

Department of the Treasury to require

financial institutions, including FDIC-

supervised institutions, to ‘‘report any

suspicious transaction relevant to a

possible violation of law or

regulation.’’ 3 Thereafter, the

Department of the Treasury, in

consultation with the FDIC, the other

federal banking agencies, and law

enforcement, developed the modern

SAR form and reporting process, which

standardized the reporting forms and

created a centralized database that could

be accessed by multiple law

enforcement and regulatory agencies.

To implement this new reporting

system, FinCEN implemented its SAR

regulation in 1996 4 for financial

institutions subject to BSA requirements

to address, among other things, the

reporting of money laundering

transactions and transactions designed

to evade the reporting requirements of

the BSA.5 To further implement this

new reporting process and reduce

unnecessary reporting burdens, the

FDIC and the other federal banking

agencies contemporaneously amended

their criminal referral form regulations

to incorporate the new SAR form and

reporting database, align their regulatory

reporting requirements with FinCEN’s

reporting requirements, and further

refine the reporting processes.6

As a result of this redesign and

FinCEN’s implementing regulation,

FDIC-

porting burdens, the

FDIC and the other federal banking

agencies contemporaneously amended

their criminal referral form regulations

to incorporate the new SAR form and

reporting database, align their regulatory

reporting requirements with FinCEN’s

reporting requirements, and further

refine the reporting processes.6

As a result of this redesign and

FinCEN’s implementing regulation,

FDIC-supervised institutions are

currently required under both FDIC and

FinCEN regulations to file SARs. These

regulations are not identical but are

substantially similar. Both SAR

regulations require, among other things,

FDIC-supervised institutions to file

SARs relating to money laundering and

transactions that are designed to evade

the reporting requirements of the BSA,

as well as maintain the confidentiality

of a SAR in most circumstances.7

However, the FDIC’s SAR regulation

covers a slightly broader range of

transactions, for example, by requiring

SARs to be filed for any known or

suspected instance of insider abuse in

any amount, and further requiring the

VerDate Sep<11>2014

16:14 Jan 21, 2021

Jkt 253001

PO 00000

Frm 00010

Fmt 4702

Sfmt 4702

E:\FR\FM\22JAP1.SGM

22JAP1

jbell on DSKJLSW7X2PROD with PROPOSALS

6582

Federal Register / Vol. 86, No. 13 / Friday, January 22, 2021 / Proposed Rules

8 See 31 U.S.C. 5318(a)(7), with implementing

regulations at 31 CFR 1010.970.

9 See https://www.fdic.gov/news/news/press/

2018/pr18091a.pdf.

10 Under the Bank Secrecy Act, the term ‘‘bank’’

is defined in 31 CFR 1010.100(d) and includes each

agent, agency, branch, or office within the United

States of banks, savings associations, credit unions,

and foreign banks.

prompt notification to the institution’s

board of directors when a SAR has been

filed

31 CFR 1010.970.

9 See https://www.fdic.gov/news/news/press/

2018/pr18091a.pdf.

10 Under the Bank Secrecy Act, the term ‘‘bank’’

is defined in 31 CFR 1010.100(d) and includes each

agent, agency, branch, or office within the United

States of banks, savings associations, credit unions,

and foreign banks.

prompt notification to the institution’s

board of directors when a SAR has been

filed.

FinCEN has general authority to grant

exemptions from the BSA’s

requirements, which includes granting

exemptions under its SAR reporting

regulation.8 FinCEN’s regulation

provides that ‘‘[t]he Secretary [of

Treasury], in his sole discretion, may by

written order or authorization make

exceptions to or grant exemptions from

the requirements of [the BSA]. Such

exceptions or exemptions may be

conditional or unconditional, may apply

to particular persons or to classes of

persons, and may apply to transactions

or classes of transactions.’’ The

Secretary of Treasury delegated this

exemption authority to FinCEN. In

contrast, the FDIC’s SAR regulations

contain a discrete set of filing

exemptions pertaining to physical

crimes (robberies and burglaries), and

lost, missing, counterfeit, or stolen

securities.

This disparity in exemptions makes it

more difficult for the FDIC to grant relief

if an FDIC-supervised institution has a

novel SAR filing proposal that does not

squarely fit within the FDIC’s regulatory

requirements, but would nonetheless be

consistent with safe and sound banking

and with the BSA. As financial

technology and innovation continue to

develop in the area of monitoring and

reporting financial crime and terrorist

financing, the FDIC will need the

express regulatory flexibility to grant

exemptive relief when appropriate in

this area

t

squarely fit within the FDIC’s regulatory

requirements, but would nonetheless be

consistent with safe and sound banking

and with the BSA. As financial

technology and innovation continue to

develop in the area of monitoring and

reporting financial crime and terrorist

financing, the FDIC will need the

express regulatory flexibility to grant

exemptive relief when appropriate in

this area.

Moreover, in 2018, the FDIC, the

Board of Governors of the Federal

Reserve System, the National Credit

Union Administration, the Office of the

Comptroller of the Currency, and

FinCEN issued a statement encouraging

banks to take innovative approaches to

meet their BSA/Anti-Money Laundering

compliance obligations.9 The statement

explained that banks 10 are encouraged

to consider, evaluate, and where

appropriate, responsibly implement

innovative approaches in this area.

Today, innovative approaches and

technological developments in the areas

of SAR monitoring, investigation, and

filing may involve, among other things:

(i) Automated form population using

natural language processing, transaction

data, and customer due diligence

information; (ii) automated or limited

investigation processes depending on

the complexity and risk of a particular

transaction and appropriate safeguards;

and (iii) enhanced monitoring processes

using more and better data, optical

scanning, artificial intelligence, or

machine learning capabilities. Requests

for exemptive relief pertaining to

innovation or other matters may

involve, among other things, expanded

investigations and SAR timing issues,

SAR disclosures and sharing, continued

SAR filings for ongoing activity, SAR

outsourcing of responsibilities and

practices, the role of agents of FDIC-

supervised institutions, the use of

shared utilities and shared data, and the

use and sharing of de-identified data

(commonly referred to as anonymized

data)

may

involve, among other things, expanded

investigations and SAR timing issues,

SAR disclosures and sharing, continued

SAR filings for ongoing activity, SAR

outsourcing of responsibilities and

practices, the role of agents of FDIC-

supervised institutions, the use of

shared utilities and shared data, and the

use and sharing of de-identified data

(commonly referred to as anonymized

data). The FDIC expects that new

technologies will continue to prompt

additional innovative approaches

related to suspicious activity monitoring

and SAR filing.

If the FDIC adopts the proposed rule

and uses it to grant exemptions, the

exemptions would not relieve FDIC-

supervised institutions from the

obligation to comply with FinCEN’s

SAR regulation when applicable. To the

extent an exemption request from an

FDIC-supervised institution involves

both the FDIC’s SAR regulation and

FinCEN’s SAR regulation, the FDIC-

supervised institution would need an

exemption from both the FDIC and

FinCEN. The FDIC expects to coordinate

with FinCEN when handling parallel

exemptions. As explained above,

however, the FDIC’s SAR regulation

imposes additional requirements not

included in FinCEN’s SAR regulation.

To the extent an exemption request is

subject to a requirement imposed by the

FDIC’s SAR regulation alone (and not a

parallel FinCEN requirement), the

proposed rule would allow the FDIC to

exempt a supervised institution from

that requirement.

III. Proposed Regulation Changes

The proposed rule would add three

paragraphs to 12 CFR 353.3(d) of the

FDIC Rules and Regulations that would

permit the FDIC to exempt a supervised

institution from the requirements, in

full or in part, of 12 CFR 353.3. Under

the proposed rule, the FDIC in

evaluating an exemption request would

determine whether the request is

consistent with safe and sound banking,

and may consider other appropriate

factors

ld add three

paragraphs to 12 CFR 353.3(d) of the

FDIC Rules and Regulations that would

permit the FDIC to exempt a supervised

institution from the requirements, in

full or in part, of 12 CFR 353.3. Under

the proposed rule, the FDIC in

evaluating an exemption request would

determine whether the request is

consistent with safe and sound banking,

and may consider other appropriate

factors. The FDIC would also seek

FinCEN’s determination whether the

exemption request is consistent with the

purposes of the BSA, as applicable,

where an exemption request involves

the filing of a SAR for potential money

laundering, violations of the BSA, or

other unusual activity covered by

FinCEN’s SAR regulation. When a

request involves the SAR filing

requirements of both FinCEN and the

FDIC, the proposed rule would require

the FDIC to seek FinCEN’s concurrence.

In addition, the proposed rule provides

that the FDIC may grant an exemption

for a specified time period. The

supervised institution would then be

able to rely on the exemption for a

period of time as determined and

communicated by the FDIC. Under the

proposed rule, the FDIC could also

extend or revoke previously granted

exemptions if circumstances change

related to the factors set out above

(consistent with the BSA and safety and

soundness), or any imposed conditions.

A. Part 353.3(d) Exemptions

Section 353.3(d) sets forth exemptions

from the FDIC’s SAR regulation.

Currently, Section 353.3(d)(1) exempts

FDIC-supervised institutions from filing

a SAR for a committed or attempted

robbery or burglary that is reported to

the appropriate law enforcement

authorities. Section 353.3(d)(2) exempts

an FDIC-supervised institution from

filing a SAR for lost, missing,

counterfeit, or stolen securities if the

institution files a report pursuant to the

reporting requirements of 17 CFR

240.17f–1. The proposed rule would

add three paragraphs to § 353.3(d).

B

itted or attempted

robbery or burglary that is reported to

the appropriate law enforcement

authorities. Section 353.3(d)(2) exempts

an FDIC-supervised institution from

filing a SAR for lost, missing,

counterfeit, or stolen securities if the

institution files a report pursuant to the

reporting requirements of 17 CFR

240.17f–1. The proposed rule would

add three paragraphs to § 353.3(d).

B. Part 353.3(d)(3)

The proposed paragraph (d)(3) would

permit the FDIC to exempt any FDIC-

supervised institution from the

requirements of 12 CFR 353.3. Upon

receiving a written request from an

FDIC-supervised institution, the FDIC

would determine whether the

exemption is consistent with safe and

sound banking. The FDIC would also

seek FinCEN’s determination whether

the exemption is consistent with the

purposes of the BSA, as applicable,

where an exemption request also

requires an exemption from FinCEN’s

SAR regulation. The exemptions may be

conditional or unconditional, may apply

to particular persons or to classes of

persons, and may apply to transactions

or classes of transactions.

The proposed paragraph (d)(3) would

require the FDIC to seek FinCEN’s

concurrence regarding an exemption

request that also requires an exemption

from FinCEN’s SAR regulation. The

proposed paragraph (d)(3) would permit

the FDIC to consult with FinCEN

regarding other exemption requests. The

FDIC may also consult with the other

VerDate Sep<11>2014

16:14 Jan 21, 2021

Jkt 253001

PO 00000

Frm 00011

Fmt 4702

Sfmt 4702

E:\FR\FM\22JAP1.SGM

22JAP1

jbell on DSKJLSW7X2PROD with PROPOSALS

ing an exemption

request that also requires an exemption

from FinCEN’s SAR regulation. The

proposed paragraph (d)(3) would permit

the FDIC to consult with FinCEN

regarding other exemption requests. The

FDIC may also consult with the other

VerDate Sep<11>2014

16:14 Jan 21, 2021

Jkt 253001

PO 00000

Frm 00011

Fmt 4702

Sfmt 4702

E:\FR\FM\22JAP1.SGM

22JAP1

jbell on DSKJLSW7X2PROD with PROPOSALS

6583

Federal Register / Vol. 86, No. 13 / Friday, January 22, 2021 / Proposed Rules

11 FDIC-supervised institutions are set forth in 12

U.S.C. 1813(q)(2).

12 See 85 FR 31598 (May 26, 2020).

13 This estimate uses the May 2019 75th

percentile hourly wage rate for Financial Managers

($73.48), Compliance Officers ($43.70), Financial

Clerks ($18.20), and Tellers ($17.49) reported by the

Bureau of Labor Statistics, National Industry-

Specific Occupational Employment, and Wage

Estimates. These wage rates have been adjusted for

changes in the Consumer Price Index for all Urban

Consumers between May 2019 and June 2020 (0.67

percent) and grossed up by 51 percent to account

for non-monetary compensation as reported by the

June 2020 Employer Costs for Employee

Compensation Data. The mix of professions varies

depending on the task associated with filing SARs

including reviewing alerts, documenting reasons

why some alerts do not merit a SAR filing, drafting,

writing, and submitting SARs, and storing SARs

and supporting documentation. For this calculation

the FDIC assumed that the mix of professions

involved in each task, the percentage of SAR alerts

that result in a SAR filing, and the percentage of

SARs that are batch filed or filed discretely, and the

percentage of SARs that contain extended content

matches what FinCEN reported in its recent

estimates of the costs associated with SAR filing

requirements (85 FR 31598).

14 FDIC analysts queried data on SAR filings by

institution from a SAR database that FinCEN makes

available to regulators and law enforcement

agencies

e percentage of

SARs that are batch filed or filed discretely, and the

percentage of SARs that contain extended content

matches what FinCEN reported in its recent

estimates of the costs associated with SAR filing

requirements (85 FR 31598).

14 FDIC analysts queried data on SAR filings by

institution from a SAR database that FinCEN makes

available to regulators and law enforcement

agencies.

15 This estimate uses FinCEN data on the SAR

filings of each FDIC-supervised institution, in

combination with FinCEN’s methodology for

estimating costs associated with SAR filings, to

estimate the SAR-related costs that each FDIC-

supervised institution incurred in the second

quarter of 2020. That estimate is then multiplied by

four, and compared to each institution’s previous

four quarters of merger-adjusted noninterest

expense and wages and salary expense reported in

Call Report filings from September 2019–June 2020.

state and federal banking agencies

before granting any exemption.

C. Part 353.3(d)(4)

The proposed paragraph (d)(4) would

require that, after the FDIC has received

FinCEN’s concurrence and consulted

with appropriate agencies, the FDIC

provide a written response to the FDIC-

supervised institution that submitted

the exemption request. An FDIC-

supervised institution that has received

an exemption under paragraph (d)(3)

may rely on the exemption for a period

of time to be communicated by the FDIC

in its granting of the exemption, which

may be indefinite.

D. Part 353.3(d)(5)

The proposed paragraph (d)(5) would

permit the FDIC to revoke or extend the

period of time for an exemption granted

under paragraph (d)(3). Under the

proposed paragraph (d)(5), the FDIC

would have discretion to revoke

exemptions. The proposed paragraph

tion for a period

of time to be communicated by the FDIC

in its granting of the exemption, which

may be indefinite.

D. Part 353.3(d)(5)

The proposed paragraph (d)(5) would

permit the FDIC to revoke or extend the

period of time for an exemption granted

under paragraph (d)(3). Under the

proposed paragraph (d)(5), the FDIC

would have discretion to revoke

exemptions. The proposed paragraph

(d)(5) would require the FDIC to provide

written notice to the FDIC-supervised

institution of the FDIC’s intention to

revoke an exemption. The proposed

paragraph (d)(5) would require the

written notice to include the basis for

the revocation and provide the FDIC-

supervised institution an opportunity to

respond. The proposed paragraph (d)(5)

would require the FDIC to consider the

institution’s response before deciding to

revoke an exemption. The proposed

paragraph (d)(5) would require the FDIC

to notify, in writing, the FDIC-

supervised institution of the FDIC’s

final decision to revoke an exemption.

IV. Summary

If the proposal is finalized, 12 CFR

353.3(d) would be amended to add

paragraphs (d)(3) through (5), and

would apply to all FDIC-supervised

institutions. These initiatives would

permit the FDIC to grant SAR

exemptions to FDIC-supervised

institutions to promote innovation,

reduce burden, and meet BSA

requirements more efficiently and

effectively.

V. Expected Effects

As explained previously, the

proposed rule would amend 12 CFR

353.3(d) to add paragraphs (d)(3)

through (5), and would apply to all

FDIC-supervised institutions. As of June

30, 2020, the FDIC supervised 3,270

institutions.11 The proposal would

permit the FDIC to grant relief to FDIC-

supervised institutions that leverage

existing or future technologies to gather

and submit the information contained in

SARs to the appropriate law

enforcement authorities and regulatory

agencies in a more efficient and cost

effective manner

-supervised institutions. As of June

30, 2020, the FDIC supervised 3,270

institutions.11 The proposal would

permit the FDIC to grant relief to FDIC-

supervised institutions that leverage

existing or future technologies to gather

and submit the information contained in

SARs to the appropriate law

enforcement authorities and regulatory

agencies in a more efficient and cost

effective manner. This change would

more closely align the FDIC’s

regulations with those of FinCEN,

which has broad statutory authority to

issue exemptions from SAR filing

requirements. Because the FDIC’s SAR

regulations do not currently contain any

provision by which the FDIC can issue

case-by-case exemptions, a situation

could arise in which FinCEN grants an

exemption from SAR filing

requirements to an FDIC-supervised

institution that has developed

innovative methods for meeting SAR

filing requirements, but the institution

would still need to file a SAR. The

proposed rule would allow the FDIC to

grant exemptions from SAR filing

requirements in conjunction with

FinCEN to reduce potential regulatory

burden.

The FDIC does not have the ability to

forecast the number of requests for

exemptions that FDIC-supervised

institutions will file as a result of this

rule, or the number of requests that the

FDIC will grant. The proposed rule is

likely to pose some increase in

compliance costs associated with

submitting an exemption request to the

FDIC, however the FDIC believes that

the costs are likely to be small. The

FDIC expects this proposed rule will

result in cost savings for FDIC-

supervised institutions that obtain

exemptions from SAR filing

requirements. However, the cost savings

are projected to be relatively modest

likely to pose some increase in

compliance costs associated with

submitting an exemption request to the

FDIC, however the FDIC believes that

the costs are likely to be small. The

FDIC expects this proposed rule will

result in cost savings for FDIC-

supervised institutions that obtain

exemptions from SAR filing

requirements. However, the cost savings

are projected to be relatively modest.

For example, using the methodology for

calculating the cost associated with

filing SARs that FinCEN published in

May 2020,12 the FDIC estimates that

FDIC-supervised institutions incurred

roughly $3.8 million 13 in costs in the

second quarter of 2020 related to

reviewing alerts, and drafting, writing,

submitting, and storing SAR filings and

documentation, which amounts to

annual estimated costs of $15.2 million

for FDIC-supervised institutions in

aggregate.

The FDIC estimated the

recordkeeping, reporting, and disclosure

costs of filing SARs for each FDIC-

supervised institution in the second

quarter of 2020 using data on SAR

filings for each institution in

combination with FinCEN’s

methodology for estimating costs

associated with SAR filings.14 The

annualized estimated recordkeeping,

reporting, and disclosure costs of filing

SARs in the second quarter of 2020 do

not represent more than 1.9 percent of

annual non-interest expense for any

FDIC-supervised institution.

Additionally, only one FDIC-supervised

institution incurred estimated

annualized recordkeeping, reporting,

and disclosure costs associated with

SAR filing that amounted to more than

5 percent of annual wage and salary

expense with the costs equaling 5.2

percent.15 Therefore, the economic

benefit of this proposed rule on FDIC-

supervised institutions is likely to be

relatively small

ion.

Additionally, only one FDIC-supervised

institution incurred estimated

annualized recordkeeping, reporting,

and disclosure costs associated with

SAR filing that amounted to more than

5 percent of annual wage and salary

expense with the costs equaling 5.2

percent.15 Therefore, the economic

benefit of this proposed rule on FDIC-

supervised institutions is likely to be

relatively small. Further, this proposed

rule would only allow the FDIC to grant

exemptions in instances where safety

and soundness and Bank Secrecy Act

regulatory requirements would not be

compromised, so the proposed rule is

also not expected to have any broader

negative economic impacts.

The FDIC invites comments on all

aspects of this analysis. In particular,

would the proposed rule have any costs

or benefits to covered entities that the

FDIC has not identified?

VI. Alternatives

The FDIC has considered alternatives

to the proposed rule but believes that

the proposed amendments represent the

most appropriate option for covered

institutions. As discussed earlier,

VerDate Sep<11>2014

16:14 Jan 21, 2021

Jkt 253001

PO 00000

Frm 00012

Fmt 4702

Sfmt 4702

E:\FR\FM\22JAP1.SGM

22JAP1

jbell on DSKJLSW7X2PROD with PROPOSALS

6584

Federal Register / Vol. 86, No. 13 / Friday, January 22, 2021 / Proposed Rules

16 5 U.S.C. 601, et seq.

17 The SBA defines a small banking organization

as having $600 million or less in assets, where ‘‘a

financial institution’s assets are determined by

averaging the assets reported on its four quarterly

financial statements for the preceding year.’’ See 13

CFR 121.201 (as amended by 84 FR 34261, effective

August 19, 2019). ‘‘SBA counts the receipts,

employees, or other measure of size of the concern

whose size is at issue and all of its domestic and

foreign affiliates.’’ See 13 CFR 121.103

financial institution’s assets are determined by

averaging the assets reported on its four quarterly

financial statements for the preceding year.’’ See 13

CFR 121.201 (as amended by 84 FR 34261, effective

August 19, 2019). ‘‘SBA counts the receipts,

employees, or other measure of size of the concern

whose size is at issue and all of its domestic and

foreign affiliates.’’ See 13 CFR 121.103. Following

these regulations, the FDIC uses a covered entity’s

affiliated and acquired assets, averaged over the

preceding four quarters, to determine whether the

FDIC-supervised institution is ‘‘small’’ for the

purposes of RFA.

18 FDIC-supervised institutions are set forth in 12

U.S.C. 1813(q)(2).

19 Call Report data, March 2020.

20 See 85 FR 31598.

21 This estimate uses the May 2019 75th

percentile hourly wage rate for Financial Managers

($73.48), Compliance Officers ($43.70), Financial

Clerks ($18.20), and Tellers ($17.49) reported by the

Bureau of Labor Statistics, National Industry-

Specific Occupational Employment, and Wage

Estimates. These wage rates have been adjusted for

changes in the Consumer Price Index for all Urban

Consumers between May 2019 and June 2020 (0.67

percent) and grossed up by 51 percent to account

for non-monetary compensation as reported by the

June 2020 Employer Costs for Employee

Compensation Data. The mix of professions varies

depending on the task associated with filing SARs

including reviewing alerts, documenting reasons

why some alerts do not merit a SAR filing, drafting,

FinCEN has statutory authority to grant

relief from SAR filing requirements to

FDIC-supervised institutions, and this

proposed rule would amend the FDIC’s

regulations so that the FDIC may issue

exemptions to SAR filing requirements

in conjunction with FinCEN. This

change could reduce regulatory burden

for FDIC-supervised institutions by

allowing institutions that develop

innovative techniques for meeting BSA

requirements to obtain exemptions from

SAR filing requirements

supervised institutions, and this

proposed rule would amend the FDIC’s

regulations so that the FDIC may issue

exemptions to SAR filing requirements

in conjunction with FinCEN. This

change could reduce regulatory burden

for FDIC-supervised institutions by

allowing institutions that develop

innovative techniques for meeting BSA

requirements to obtain exemptions from

SAR filing requirements. The FDIC

considered maintaining its regulations

in their current form, but chose not to

do so because the FDIC believes that

doing so would be unnecessarily

burdensome and may discourage

institutions from developing innovative

approaches to meeting BSA

requirements.

VII. Request for Comments

The FDIC invites comments on all

aspects of this proposed rulemaking. In

particular, the FDIC requests comments

on the following questions:

Question 1. The FDIC invites

comments on the proposed exemptions

to 12 CFR 353.3.

Question 2. The FDIC invites

comments on whether any additional

detail relating to the procedures that

would be followed in considering,

granting, or revoking exemptions are

necessary.

Written comments must be received

by the FDIC no later than February 22,

2021.

VIII. Administrative Law Matters

A. The Paperwork Reduction Act

Certain provisions of the proposed

rule contain ‘‘collection of information’’

requirements within the meaning of the

Paperwork Reduction Act (PRA) of 1995

(44 U.S.C. 3501–3521). In accordance

with the requirements of the PRA, the

FDIC may not conduct or sponsor, and

the respondent is not required to

respond to, an information collection

unless it displays a currently valid

Office of Management and Budget

(OMB) control number. The information

collection requirements contained in

this notice of proposed rulemaking have

been submitted to OMB for review and

approval by FDIC under section 3507(d)

of the PRA and § 1320.11 of OMB’s

implementing regulations (5 CFR part

1320) as a new information collection

nformation collection

unless it displays a currently valid

Office of Management and Budget

(OMB) control number. The information

collection requirements contained in

this notice of proposed rulemaking have

been submitted to OMB for review and

approval by FDIC under section 3507(d)

of the PRA and § 1320.11 of OMB’s

implementing regulations (5 CFR part

1320) as a new information collection.

The proposed rule contains voluntary

reporting requirements, or exemption

requests, in 12 CFR 353.3(d)(3).

Title of Proposed Information

Collection: Exemptions to Suspicious

Activity Report Requirements.

OMB Control Number: 3064—[NEW].

Frequency of Response: On Occasion.

Affected Public: Businesses or other

for-profit.

Respondents: Any FDIC-supervised

institution wishing to obtain an

exemption from the Suspicious Activity

Report requirements.

Estimated Number of Annual

Respondents: 3.

Estimated Burden per Response: 8

hours.

Total estimated annual burden: 24

hours.

To derive these estimates, the FDIC

assumed that the FDIC-supervised

institutions that file the most SARs will

be the most likely to request exemptions

from SAR filing requirements. There are

ten FDIC-supervised institutions that

filed 1,000 or more SARs in the second

quarter of 2020. The FDIC expects

roughly one-third of those institutions

to request an exemption per year, so the

FDIC expects 3 annual respondents to

this information collection. The FDIC

estimates the hourly burden of an

exemption request to be 8 hours

equest exemptions

from SAR filing requirements. There are

ten FDIC-supervised institutions that

filed 1,000 or more SARs in the second

quarter of 2020. The FDIC expects

roughly one-third of those institutions

to request an exemption per year, so the

FDIC expects 3 annual respondents to

this information collection. The FDIC

estimates the hourly burden of an

exemption request to be 8 hours.

Comments are invited on: (a) Whether

the collection of information is

necessary for the proper performance of

the FDIC’s functions, including whether

the information has practical utility; (b)

the accuracy of the estimates of the

burden of the information collection,

including the validity of the

methodology and assumptions used; (c)

ways to enhance the quality, utility, and

clarity of the information to be

collected; (d) ways to minimize the

burden of the information collection on

respondents, including through the use

of automated collection techniques or

other forms of information technology;

and (e) estimates of capital or start-up

costs and costs of operation,

maintenance, and purchase of services

to provide information.

All comments will become a matter of

public record. Comments on aspects of

this notice that may affect reporting or

recordkeeping requirements and burden

estimates should be sent to the

addresses listed in the ADDRESSES

section of this preamble. A copy of the

comments may also be submitted to the

FDIC OMB desk officer by mail to U.S.

Office of Management and Budget, 725

17th Street NW, #10235, Washington,

DC 20503 or by facsimile to 202–395–

5806, Attention, Federal Banking

Agency Desk Officer.

B

or

recordkeeping requirements and burden

estimates should be sent to the

addresses listed in the ADDRESSES

section of this preamble. A copy of the

comments may also be submitted to the

FDIC OMB desk officer by mail to U.S.

Office of Management and Budget, 725

17th Street NW, #10235, Washington,

DC 20503 or by facsimile to 202–395–

5806, Attention, Federal Banking

Agency Desk Officer.

B. The Regulatory Flexibility Act

The Regulatory Flexibility Act (RFA),

requires that, in connection with a

notice of proposed rulemaking, an

agency prepare and make available for

public comment an initial regulatory

flexibility analysis that describes the

impact of the proposed rule on small

entities.16 However, a regulatory

flexibility analysis is not required if the

agency certifies that the rule will not

have a significant economic impact on

a substantial number of small entities,

and publishes its certification and a

short explanatory statement in the

Federal Register together with the rule.

The Small Business Administration

(SBA) has defined ‘‘small entities’’ to

include banking organizations with total

assets of less than or equal to $600

million.17 Generally, the FDIC considers

a significant effect to be a quantified

effect in excess of 5 percent of total

annual salaries and benefits per

institution, or 2.5 percent of total

noninterest expenses. The FDIC believes

that effects in excess of these thresholds

typically represent significant effects for

FDIC-supervised institutions. For the

reasons provided below, the FDIC

certifies that the proposed rule would

not have a significant economic impact

on a substantial number of small

banking organizations. Accordingly, a

regulatory flexibility analysis is not

required

nterest expenses. The FDIC believes

that effects in excess of these thresholds

typically represent significant effects for

FDIC-supervised institutions. For the

reasons provided below, the FDIC

certifies that the proposed rule would

not have a significant economic impact

on a substantial number of small

banking organizations. Accordingly, a

regulatory flexibility analysis is not

required.

As of June 30, 2020, the FDIC

supervised 3,270 institutions,18 of

which 2,492 are considered small

entities for the purposes of RFA.19 Using

the methodology for calculating the cost

associated with filing SARs that FinCEN

published in May 2020,20 the FDIC

estimates that small FDIC-supervised

institutions incurred $460,565.08 21 in

VerDate Sep<11>2014

16:14 Jan 21, 2021

Jkt 253001

PO 00000

Frm 00013

Fmt 4702

Sfmt 4702

E:\FR\FM\22JAP1.SGM

22JAP1

jbell on DSKJLSW7X2PROD with PROPOSALS

6585

Federal Register / Vol. 86, No. 13 / Friday, January 22, 2021 / Proposed Rules

writing, and submitting SARs, and storing SARs

and supporting documentation. For this calculation

the FDIC assumed that the mix of professions

involved in each task, the percentage of SAR alerts

that result in a SAR filing, and the percentage of

SARs that are batch filed or filed discretely, and the

percentage of SARs that contain extended content

matches what FinCEN reported in its recent

estimates of the costs associated with SAR filing

requirements (85 FR 31598).

22 FDIC analysts queried data on SAR filings by

institution from a SAR database that FinCEN makes

available to regulators and law enforcement

agencies.

23 This estimate uses FinCEN data on the SAR

filings of each FDIC-supervised institution, in

combination with FinCEN’s methodology for

estimating costs associated with SAR filings, to

estimate the SAR-related costs that each FDIC-

supervised institution incurred in the second

quarter of 2020

tution from a SAR database that FinCEN makes

available to regulators and law enforcement

agencies.

23 This estimate uses FinCEN data on the SAR

filings of each FDIC-supervised institution, in

combination with FinCEN’s methodology for

estimating costs associated with SAR filings, to

estimate the SAR-related costs that each FDIC-

supervised institution incurred in the second

quarter of 2020. That estimate is then multiplied by

four, and compared to each institution’s previous

four quarters of merger-adjusted noninterest

expense and wages and salary expense reported in

Call Report filings from June 2019 to March 2020.

24 Public Law 106–102, section 722, 113 Stat.

1338, 1471 (1999).

25 Public Law 104–208, 110 Stat. 3009 (1996).

26 82 FR 15900 (March 31, 2017).

27 12 U.S.C. 4802(a).

28 Id.

costs in the second quarter of 2020

related to reviewing alerts, documenting

the reasons why certain alerts do not

merit a SAR filing, and drafting, writing,

submitting, and storing SAR filings and

documentation, which amounts to

annual estimated costs of $1,842,260.32

for small FDIC-supervised institutions

in aggregate.

The FDIC estimated costs of filing

SARs for each FDIC-supervised

institution in the second quarter of 2020

using data on SAR filings for each

institution in combination with

FinCEN’s methodology for estimating

costs associated with SAR filings.22 The

annualized estimated recordkeeping,

reporting, and disclosure costs of filing

SARs in the second quarter of 2020 do

not represent more than 1.9 percent of

annual non-interest expense for any

small FDIC-supervised institution

econd quarter of 2020

using data on SAR filings for each

institution in combination with

FinCEN’s methodology for estimating

costs associated with SAR filings.22 The

annualized estimated recordkeeping,

reporting, and disclosure costs of filing

SARs in the second quarter of 2020 do

not represent more than 1.9 percent of

annual non-interest expense for any

small FDIC-supervised institution.

Additionally, only one small FDIC-

supervised institution incurred

estimated annualized costs associated

with SAR filing that amounted to more

than 5 percent of annual wage and

salary expense with the costs equaling

5.2 percent.23 While the total estimated

costs of filing SARs represent a

significant expense for one FDIC-

supervised small entity, the costs do not

represent a significant amount for all

other FDIC-supervised small entities.

Thus, the cost savings from this

proposal for all other FDIC-supervised

small entities will likely not be

significant. In addition, the cost savings

from receiving a SAR exemption would

be at least partially offset by the costs

associated with requesting an

exemption and the costs associated with

developing a method for meeting SAR

requirements. Further, this proposed

rule would only allow the FDIC to grant

exemptions in instances where safety

and soundness and BSA regulatory

requirements would not be

compromised, so the proposed rule is

also not expected to have any broader

negative economic impacts.

Based on the information above, the

FDIC certifies that the rule would not

have a significant economic impact on

a substantial number of small entities.

The FDIC invites comments on all

aspects of the supporting information

provided in this section, and in

particular, whether the proposed rule

would have any significant effects on

small entities that the FDIC has not

identified.

C

cts.

Based on the information above, the

FDIC certifies that the rule would not

have a significant economic impact on

a substantial number of small entities.

The FDIC invites comments on all

aspects of the supporting information

provided in this section, and in

particular, whether the proposed rule

would have any significant effects on

small entities that the FDIC has not

identified.

C. Plain Language

Section 722 of the Gramm-Leach-

Bliley Act 24 requires the federal

banking agencies to use plain language

in all proposed and final rules

published after January 1, 2000. The

FDIC has sought to present the proposed

rule in a simple and straightforward

manner. The FDIC invites comments on

whether the proposal is clearly stated

and effectively organized, and how the

FDIC might make the proposal easier to

understand.

D. The Economic Growth and

Regulatory Paperwork Reduction Act

Under section 2222 of the Economic

Growth and Regulatory Paperwork

Reduction Act of 1996 (EGRPRA), the

FDIC is required to review all of its

regulations, at least once every 10 years,

in order to identify any outdated or

otherwise unnecessary regulations

imposed on insured institutions.25 The

FDIC, along with the other federal

banking agencies, submitted a Joint

Report to Congress on March 21, 2017

(EGRPRA Report) discussing how the

review was conducted, what has been

done to date to address regulatory

burden, and further measures the FDIC

will take to address issues that were

identified.26 By providing the ability to

issue exemptions and reduce burdens

on FDIC-supervised institutions, this

rule complements other actions that the

FDIC has taken, separately and with the

other federal banking agencies, to

further the EGRPRA mandate.

E

ed, what has been

done to date to address regulatory

burden, and further measures the FDIC

will take to address issues that were

identified.26 By providing the ability to

issue exemptions and reduce burdens

on FDIC-supervised institutions, this

rule complements other actions that the

FDIC has taken, separately and with the

other federal banking agencies, to

further the EGRPRA mandate.

E. Riegle Community Development and

Regulatory Improvement Act of 1994

Pursuant to section 302(a) of the

Riegle Community Development and

Regulatory Improvement Act

(RCDRIA),27 in determining the effective

date and administrative compliance

requirements for new regulations that

impose additional reporting, disclosure,

or other requirements on insured

depository institutions (IDIs), each

federal banking agency must consider,

consistent with principles of safety and

soundness and the public interest, any

administrative burdens that the

regulations would place on depository

institutions, including small depository

institutions, and customers of

depository institutions, as well as the

benefits of the regulations. In addition,

section 302(b) of RCDRIA requires new

regulations and amendments to

regulations that impose additional

reporting, disclosures, or other new

requirements on IDIs generally to take

effect on the first day of a calendar

quarter that begins on or after the date

on which the regulations are published

in final form.28 The FDIC invites

comments that further will inform its

consideration of RCDRIA.

List of Subjects in 12 CFR Part 353

Banks, banking, Crime, Reporting and

recordkeeping requirements.

Authority and Issuance

For the reasons stated in the

preamble, the Federal Deposit Insurance

Corporation proposes to amend 12 CFR

part 353 as follows:

PART 353—SUSPICIOUS ACTIVITY

REPORTS

■1. The authority citation for part 353

continues to read as follows:

Authority: 12 U.S.C. 1818, 1819; 31 U.S.C.

5318.

■2

FR Part 353

Banks, banking, Crime, Reporting and

recordkeeping requirements.

Authority and Issuance

For the reasons stated in the

preamble, the Federal Deposit Insurance

Corporation proposes to amend 12 CFR

part 353 as follows:

PART 353—SUSPICIOUS ACTIVITY

REPORTS

■1. The authority citation for part 353

continues to read as follows:

Authority: 12 U.S.C. 1818, 1819; 31 U.S.C.

5318.

■2. Revise § 353.3 paragraph (d) to read

as follows:

§ 353.3

Reports and records.

*

*

*

*

*

(d) Exemptions. (1) An FDIC-

supervised institution need not file a

suspicious activity report for a robbery

or burglary committed or attempted,

that is reported to appropriate law

enforcement authorities.

(2) An FDIC-supervised institution

need not file a suspicious activity report

for lost, missing, counterfeit, or stolen

securities if it files a report pursuant to

the reporting requirements of 17 CFR

240.17f–1.

(3) The FDIC may exempt any FDIC-

supervised institution from the

requirements of this section. Upon

receiving a written request from an

FDIC-supervised institution, the FDIC

will determine whether the exemption

is consistent with safe and sound

banking and may consider other

appropriate factors. The FDIC will also

VerDate Sep<11>2014

16:14 Jan 21, 2021

Jkt 253001

PO 00000

Frm 00014

Fmt 4702

Sfmt 4702

E:\FR\FM\22JAP1.SGM

22JAP1

jbell on DSKJLSW7X2PROD with PROPOSALS

6586

Federal Register / Vol. 86, No. 13 / Friday, January 22, 2021 / Proposed Rules

1 See 50 FR 53294–01 (Dec. 31, 1985).

2 58 FR 5663 (Jan. 22, 1993).

3 Public Law 102–550, 106 Stat. 3672, 4059

er

appropriate factors. The FDIC will also

VerDate Sep<11>2014

16:14 Jan 21, 2021

Jkt 253001

PO 00000

Frm 00014

Fmt 4702

Sfmt 4702

E:\FR\FM\22JAP1.SGM

22JAP1

jbell on DSKJLSW7X2PROD with PROPOSALS

6586

Federal Register / Vol. 86, No. 13 / Friday, January 22, 2021 / Proposed Rules

1 See 50 FR 53294–01 (Dec. 31, 1985).

2 58 FR 5663 (Jan. 22, 1993).

3 Public Law 102–550, 106 Stat. 3672, 4059

(1992).

4 31 U.S.C. 5318(g)(1). The quoted text is from

section 1517 of the Annunzio-Wylie Anti-Money

Laundering Act, which was originally codified at 31

U.S.C. 5314(g). The text was moved as part of the

Violent Crime Control and Law Enforcement Act of

1994.

seek FinCEN’s determination whether

the exemption is consistent with the

purposes of the BSA, if applicable. The

exemption shall be applicable only as

expressly stated in the exemption, may

be conditional or unconditional, may

apply to particular persons or to classes

of persons, and may apply to

transactions or classes of transactions.

The FDIC will seek FinCEN’s

concurrence with regard to any

exemption request that also requires an

exemption from FinCEN’s SAR

regulation, and may consult with

FinCEN regarding other exemption

requests. The FDIC also may consult

with the other state and federal banking

agencies before granting any exemption.

(4) The FDIC will provide a written

response to the FDIC-supervised

institution that submitted the exemption

request after considering whether the

exemption is consistent with safe and

sound banking, consulting with the

appropriate agencies, and seeking

concurrence when appropriate. An

FDIC-supervised institution that has

received an exemption under paragraph

ore granting any exemption.

(4) The FDIC will provide a written

response to the FDIC-supervised

institution that submitted the exemption

request after considering whether the

exemption is consistent with safe and

sound banking, consulting with the

appropriate agencies, and seeking

concurrence when appropriate. An

FDIC-supervised institution that has

received an exemption under paragraph

(d)(3) of this section may rely on the

exemption for a period of time to be

communicated by the FDIC in its

granting of the exemption, which may

be indefinite.

(5) The FDIC may extend the period

of time or may revoke an exemption

granted under paragraph (d)(3) of this

section. Exemptions may be revoked at

the sole discretion of the FDIC. The

FDIC will provide written notice to the

FDIC-supervised institution of the

FDIC’s intention to revoke an

exemption. The notice will include the

basis for the revocation and will provide

an opportunity for the FDIC-supervised

institution to submit a response to the

FDIC. The FDIC will consider the

response prior to deciding whether or

not to revoke an exemption, and will

notify the FDIC-supervised institution of

the FDIC’s final decision to revoke an

exemption in writing.

*

*

*

*

*

Federal Deposit Insurance Corporation.

By order of the Board of Directors.

Dated at Washington, DC, on December 15,

2020.

James P. Sheesley,

Assistant Executive Secretary.

[FR Doc. 2021–00037 Filed 1–21–21; 8:45 am]

BILLING CODE 6714–01–P

NATIONAL CREDIT UNION

ADMINISTRATION

12 CFR Part 748

RIN 3133–AF25

Bank Secrecy Act

AGENCY: National Credit Union

Administration (NCUA).

ACTION: Proposed rule.

SUMMARY: The NCUA Board (Board) is

inviting comment on a proposed rule

that would modify the requirements for

federally insured credit unions (FICUs)

to file Suspicious Activity Reports

(SARs)

8:45 am]

BILLING CODE 6714–01–P

NATIONAL CREDIT UNION

ADMINISTRATION

12 CFR Part 748

RIN 3133–AF25

Bank Secrecy Act

AGENCY: National Credit Union

Administration (NCUA).

ACTION: Proposed rule.

SUMMARY: The NCUA Board (Board) is

inviting comment on a proposed rule

that would modify the requirements for

federally insured credit unions (FICUs)

to file Suspicious Activity Reports

(SARs). The proposed rule would

amend the NCUA’s SARs regulation to

allow the Board to issue exemptions

from the requirements of that regulation

in order to grant relief to FICUs that

develop innovative solutions to meet

the requirements of the Bank Secrecy

Act (BSA).

DATES: Comments must be received by

February 22, 2021.

ADDRESSES: You may submit written

comments, identified by RIN 3133–

AF25, by any of the following methods

(Please send comments by one method

only):

• Federal eRulemaking Portal: http://

www.regulations.gov. Follow the

instructions for submitting comments.

• Fax: (703) 518–6319. Include

‘‘[Your Name]—Comments on Proposed

Rule: Bank Secrecy Act’’ in the

transmittal.

• Mail: Address to Melane Conyers-

Ausbrooks, Secretary of the Board,

National Credit Union Administration,

1775 Duke Street, Alexandria, Virginia

22314–3428.

• Hand Delivery/Courier: Same as

mail address.

Public Inspection: You may view all

public comments on the Federal

eRulemaking Portal at http://

www.regulations.gov as submitted,

except for those we cannot post for

technical reasons. The NCUA will not

edit or remove any identifying or

contact information from the public

comments submitted. Due to social

distancing measures in effect, the usual

opportunity to inspect paper copies of

comments in the NCUA’s law library is

not currently available. After social

distancing measures are relaxed, visitors

may make an appointment to review

paper copies by calling (703) 518–6540

or emailing OGCMail@ncua.gov

e any identifying or

contact information from the public

comments submitted. Due to social

distancing measures in effect, the usual

opportunity to inspect paper copies of

comments in the NCUA’s law library is

not currently available. After social

distancing measures are relaxed, visitors

may make an appointment to review

paper copies by calling (703) 518–6540

or emailing OGCMail@ncua.gov.

FOR FURTHER INFORMATION CONTACT:

Policy and Analysis: Timothy Segerson,

Deputy Director, Office of Examination

and Insurance, (703) 518–6397;

Legal:Justin Anderson, Senior Staff

Attorney, Damon P. Frank, Staff

Attorney, and Chrisanthy J. Loizos,

Senior Staff Attorney, Office of General

Counsel, (703) 518–6540; or by mail at

National Credit Union Administration,

1775 Duke Street, Alexandria, VA

22314.

SUPPLEMENTARY INFORMATION:

I. Introduction

Requirements related to SARs are

codified in 12 CFR 748.1(c). This

section of the NCUA’s regulations

requires FICUs to file SARs under

certain conditions. In addition, this

section provides for: (i) Board of

director or other committee notification;

(ii) filing exceptions; (iii) SAR

confidentiality; (iv) recordkeeping

requirements; (v) supporting

documentation requirements; and (vi)

limitations on liability. The proposed

rule would allow the NCUA to issue

exemptions from the regulation’s SAR

requirements.

II. Background

The NCUA’s original SARs regulation

required FICUs to report potential

violations of law arising from

transactions that flow through those

institutions.1 As discussed in more

detail later in this document, this

regulation has been amended and

updated since its inception

ty. The proposed

rule would allow the NCUA to issue

exemptions from the regulation’s SAR

requirements.

II. Background

The NCUA’s original SARs regulation

required FICUs to report potential

violations of law arising from

transactions that flow through those

institutions.1 As discussed in more

detail later in this document, this

regulation has been amended and

updated since its inception. The

NCUA’s purpose for the regulation has,

however, remained unchanged because

fraud, abusive insider transactions,

check-kiting schemes, money

laundering, and other financial crimes

can pose serious threats to a financial

institution’s continued viability and, if

unchecked, can undermine the public

confidence in the nation’s financial

services industry generally.2

In 1992, Congress passed the

Annunzio-Wylie Anti-Money

Laundering Act (the Anti-Money

Laundering Act), which redesigned the

criminal referral process applicable to

credit unions and made the reporting of

certain suspicious transactions a

requirement of the BSA.3 The Anti-

Money Laundering Act permitted the

Department of the Treasury to require

financial institutions, including credit

unions, to ‘‘report any suspicious

transaction relevant to a possible

violation of law or regulation.’’ 4

VerDate Sep<11>2014

16:14 Jan 21, 2021

Jkt 253001

PO 00000

Frm 00015

Fmt 4702

Sfmt 4702

E:\FR\FM\22JAP1.SGM

22JAP1

jbell on DSKJLSW7X2PROD with PROPOSALS