FinCEN to Develop ‘No Action Letter’ Program

The Financial Crimes Enforcement Network intends to develop a program that allows it to issue “no action letters” to financial institutions that request them, agency officials said recently.

Under such a program, a financial institution may submit details of an activity for evaluation by a federal regulator. If a “no action letter” is released, the regulator states that it will not sanction the institution for the activities.

Some federal financial regulators have a process for requesting a letter; the National Credit Union Administration does not.

“FinCEN concludes that a no-action letter process would be a useful complement to its current forms of regulatory guidance and relief,” Acting Director Michael Mosier said recently.  “FinCEN looks forward to continuing to engage with our government partners and the public during a future rulemaking process to ensure all constructive feedback is considered on this important issue.”

FinCEN officials cautioned that they do not currently have the resources to fully implement the program. Congress required FinCEN to evaluate the potential use of “no action letters” last year when the House and Senate updated money laundering and Bank Secrecy Act laws.

In its report FinCEN officials made it clear they do not want to infringe on other agencies’ turf in evaluating whether a request for a letter is warranted. “FinCEN believes that a no-action letter process would likely be most effective and workable if it is limited to FinCEN’s exercise of its own enforcement authority, as opposed to also addressing other regulators’ exercise of their distinct enforcement authorities,” the report stated.

The report also states that FinCEN officials will consult with other financial regulators during the process. “If FinCEN were to issue a no-action letter, it would not have the ability to prevent another agency from bringing an enforcement action under that agency’s own authority,” the report stated.

Funding for such a program is an issue, the report stated. “Absent additional resources, FinCEN would not be able to process no-action letter requests within a reasonable timeframe without redirecting resources away from important enforcement, compliance, or other FinCEN mission-related work,” FinCEN officials said.

The Biden Administration has asked for $191 million for FinCEN for FY22. That represents a $64 million boost from the current fiscal year.

House Financial Services Committee Chairwoman Maxine Waters, D-CA., has pushed congressional appropriators to drastically increase FinCEN funding, noting that the agency also must implement a policy governing requirements that businesses disclose their actual owners when opening an account.

The House Appropriations Committee has approved an FY22 funding measure that includes a $63.6 million increase for FinCEN.


A Report to Congress: Assessment of No-Action Letters

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