FinCEN Innovation Questions and Answers

The following frequently asked questions (FAQs) further explain the purpose and operation of FinCEN’s Innovation Hours. These FAQs will be updated as needed.

FAQs (as of May 24, 2019)

1. What is the FinCEN Innovation Initiative?

The FinCEN Innovation Initiative is a new initiative designed to foster a better understanding of the opportunities and challenges of Bank Secrecy Act and Anti-Money Laundering (BSA/AML)-related innovation in the financial services sector.  FinCEN recognizes that private sector innovation, either by new ways of using existing tools or by adopting new financial (FinTech), regulatory (RegTech) or other technologies, has the potential to enhance financial institutions’ BSA/AML compliance programs, including aspects involving risk identification, transaction monitoring, and suspicious activity reporting.  When responsibly employed, these enhancements can be an important element in safeguarding the financial system against an evolving array of threats.

FinCEN’s Innovation Initiative, highlighted in the FinCEN-Federal Banking Agency Joint Statement on Innovative Efforts to Combat Money Laundering and Terrorist Financing (December 3, 2018),[1] includes the FinCEN Innovation Hours Program being announced today (May 24, 2019), support for exceptive relief pilots to facilitate innovative solutions to AML and Countering the Financing of Terrorism (CFT) compliance challenges, and ongoing efforts to provide enhanced feedback and information sharing programs.

In addition, FinCEN will consider for future implementation the feasibility of incorporating demonstration and application testing capabilities to facilitate the development of innovative solutions to AML/CFT challenges. Longer term, FinCEN will also consider the feasibility of sponsoring “Tech Sprints” to facilitate the development of innovative solutions to AML/CFT challenges.[2]

 

 


[1] See https://www.fincen.gov/news/news-releases/treasurys-fincen-and-federal-banking-agencies-issue-joint-statement-encouraging.

[2] Tech Sprints are events hosted by government, private-sector, and/or non-profit organizations or academic institutions that bring together representatives from all those sectors to collaboratively identify potential technological or other solutions to a particular problem or issue.  FinCEN is considering the feasibility of hosting such events in the future that would focus on specific AML/CFT challenges or issues. 

2. What is the Innovation Hours Program?

The Innovation Hours Program is the most recent addition to the FinCEN Innovation Initiative, and is a mechanism through which FinCEN will provide dedicated times for users and providers of regulatory and financial technology, and other firms involved the financial services industry, to discuss their BSA-related innovative products and services.  FinCEN intends for the Innovation Hours to benefit both the private sector and government.  Industry would share information about specific innovations, including their potential opportunities and challenges.

3. Are there requirements for participation in Innovation Hours?

Yes. To participate in Innovation Hours, FinCEN requires at a minimum that:

  1. The requester provides or uses financial or regulatory products or services that comply with BSA regulations or are intended to enhance compliance with those regulations.
  1. The presentation or demonstration addresses how such products or services, or innovative uses of existing tools, can enhance financial institutions’ BSA/AML compliance programs, including, for example, aspects involving risk identification, transaction monitoring, and suspicious activity reporting, or otherwise improve the effectiveness and efficiency of the AML/CFT framework to make more valuable information available to law enforcement to better protect the U.S. financial system.
  1. Products must be in production or ready for deployment. And,
  1. The company is not the subject of a federal or other criminal or civil enforcement action.
4. I believe I am eligible, how do I participate in the Innovation Hours?

Companies interested in participating in Innovation Hours must submit a request through the Innovation Hours webpage using the request form and questionnaire provided.  Through the request form and questionnaire, the company will be required to provide information on the firm’s business and the discussion topics.  When necessary, FinCEN staff may seek additional information, including information regarding a company’s history, technology portfolio, and technology readiness levels as appropriate to enable an informed review of the request.  After evaluating a request, FinCEN will notify the company by email whether its request was granted within 20 working days after FinCEN has received sufficient information to evaluate the request.  If the request is granted, the email will include a date, time, and location for the meeting, among other details.

5. If I satisfy the prerequisites outlined in FAQ 3, am I guaranteed a slot in the Innovation Hours Program?

No. Although FinCEN will make every effort to meet with all eligible companies requesting time during Innovation Hours, there may be circumstances where FinCEN will deny a request from an otherwise eligible company. This could be due to priorities, timing, resources, staff, logistical support, or other factors. Eligible companies denied time during Innovation Hours are encouraged to make a later request.

6. Will FinCEN provide approval, rulings, or guidance on the applicable regulatory framework or advice concerning the use or operational structure of the product or service that is the subject of the presentation or demonstration?

No.  FinCEN will not provide formal or binding approval, rulings, guidance or otherwise opine on the use or structure of the product or service that is the subject of the presentation or demonstration.

A company may seek a formal administrative ruling or guidance on the application of BSA laws and regulations to a particular business model, product or service through the procedures outlined in 31 CFR §§ 1010.710-717.  See also https://www.fincen.gov/administrative-rulings.

Similarly, to the extent a company may seek a formal exception from certain BSA/AML regulatory requirements to test certain innovations, such requests should be made in writing pursuant to 31 CFR § 1010.970.

7. Can I participate in Innovation Hours to discuss an idea for a BSA-related innovative product or service that has not been fully developed?

Although FinCEN is interested in innovative approaches and ideas, FinCEN will prioritize requests from companies that are further along in developing and using BSA-related innovative products and services.

8. Can I use Innovation Hours to ask general questions about how to comply with the BSA and its implementing regulations?

No. Although general compliance or other questions may come up during Innovation Hours, such questions should not be the purpose of the meeting. Companies with general compliance questions should contact the FinCEN Resource Center (FRC) at 1-800-767-2825 or FRC@fincen.gov.

9. How frequently are Innovation Hours held?

FinCEN intends to hold Innovation Hours once a month primarily at its offices in the Washington, D.C. area. FinCEN may also hold regional Innovation Hours outside of Washington, D.C.

Generally, presenters will have up to one hour for their presentation or demonstration. Innovation Hours may also focus on a particular topic during a given month. FinCEN will publish information about the timing, location, and topics for Innovation Hours on its website at https://www.fincen.gov/resources/fincens-innovation-hours-program.

10. Is participation in the Innovation Hours Program restricted to U.S. persons and U.S.-based companies?

No. The Innovation Hours Program is open to all FinTech and RegTech companies and financial institutions who wish to showcase their AML/CFT innovation, consistent with the requirements noted in FAQ #3. Priority will be given, however, to those companies doing substantial business in the United States.

11. Are there any special technology or security arrangements required to conduct a presentation or technology demonstration?

FinCEN will provide additional guidance to companies participating in the Innovation Hours Program on any necessary technological or security requirements.

12. I am a vendor who provides BSA-related products and services that would be useful to government agencies like FinCEN. May I participate in Innovation Hours to discuss doing business with FinCEN?

No. Vendors may not use Innovation Hours to sell products and services to FinCEN or otherwise solicit contract opportunities. Companies may obtain more information regarding contract opportunities with FinCEN by visiting FinCEN’s website at https://www.fincen.gov/contract-opportunities.

13. Will companies meeting with FinCEN be reimbursed for any expenses, such as travel fare, meals, or lodging?

No. FinCEN will not arrange travel or lodging or reimburse companies for any expenses associated with participating in Innovation Hours.

14. Will FinCEN recommend or endorse a company’s product or service presented or demonstrated during Innovation Hours?

No. As a federal agency, FinCEN may not recommend or endorse the products of any company. Participation in the Innovation Hours Program does not constitute a recommendation, endorsement or other imprimatur by FinCEN. It is a federal offense for anyone to misuse or otherwise misrepresent through the use of an official department or agency seal that FinCEN endorses its products (18 U.S.C. § 506 and 18 U.S.C. § 1017).