Regulatory Efficiency and Effectiveness

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Taking a Fresh Look at Regulatory Efficiency and Effectiveness

FinCEN is continuously engaged in ensuring that we carry out our mission as administrator of the Bank Secrecy Act (BSA) in the most efficient and effective manner possible. Upon joining FinCEN as the Director in March 2007, James H. Freis, Jr. announced that he was going to “take a fresh look” at the way FinCEN carries out its mission. This included a review of the regulatory framework with a renewed focus on ensuring that requirements on covered financial industries are efficient in their application, yet remain extremely effective in their service to law enforcement investigators, FinCEN analysts, and regulatory examiners, to safeguard the financial system from the abuses of terrorist financing, money laundering, and other financial crime.

FinCEN’s Steps toward Efficiency and Effectiveness

On June 22, 2007, FinCEN launched its initial regulatory efficiency and effectiveness initiative. Prior to the launch, then-Secretary Paulson was briefed on certain aspects of FinCEN’s analytical capabilities, including its recent Mortgage Fraud, and Domestic Shell Company reports. He also received a detailed briefing from FBI counterterrorism officials concerning their use of the BSA information and the wealth of investigatory value that they find in CTR and SAR filings.

Representatives from trade groups representing thousands of financial services providers also received similar briefings from FinCEN and the FBI. Senior executives from the American Bankers Association, America’s Community Bankers, Credit Union National Association, Financial Services Roundtable, Independent Community Bankers of America, Institute of International Bankers, National Association of Federal Credit Unions, National Money Transmitters Association, and The Clearing House Association attended. After those briefings, the Secretary joined the trade group representatives for a discussion of the initiatives.

Other Federal regulatory agencies including the Office of Thrift Supervision, the Federal Reserve, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the National Credit Union Administration and the Internal Revenue Service sent representatives to attend the announcement and provided their support to FinCEN’s initiatives.

FinCEN’s Initial Regulatory Efficiency and Effectiveness Initiative

Under the initiative announced that day, FinCEN commenced a joint effort with the Federal bank regulators to ensure that financial institutions and regulators treat compliance obligations in a manner that helps to avoid expenditures that are not commensurate with actual risk. In an effort to address many of the issues dealing with the oversight of and access to banking by Money Services Businesses (MSBs), FinCEN worked with the IRS, State regulators, and Federal functional regulators to develop MSB examination materials, and completed the BSA/AML Examination Manual for Money Services Businesses in December 2008. In addition, FinCEN crafted a more narrow definition of MSBs. FinCEN also completed its own new chapter of the Code of Federal Regulations to ensure that a financial institution will only need to look in two places to identify its regulatory responsibilities. FinCEN also committed to providing affected industries with written feedback within 18 months from the effective date of new regulations or changes to existing regulations. As part of its efforts to provide more value in the feedback products that it produces for the financial industry, FinCEN continues to release The SAR Activity Review – Trends, Tips & Issues and The SAR Activity Review – By the Numbers twice a year.

Director Freis reiterated his commitment to efficiency and effectiveness during remarks made in February 2011 before the American Bankers Association’s National Conference for Community Bankers. FinCEN’s focus on efficiency and effectiveness continues, as evidenced in the actions below.

• 2011
• 2010
• 2009
• 2008
• 2007