As we noted in a client alert late last week, the federal banking agencies released on August 13, 2020, a joint statement on enforcement of Bank Secrecy Act/Anti-Money Laundering (“BSA/AML”) requirements.  At the time, the Federal Deposit Insurance Corporation made reference to a possible separate “Statement on Enforcement of the Bank Secrecy Act” from FinCEN.  FinCEN released that statement earlier today.  We summarize below three key takeaways from the FinCEN statement:

  1. The FinCEN statement asserts (emphasis added) that:  “When FinCEN takes an enforcement action, it will seek to establish a violation of law based on applicable statutes and regulations.  FinCEN will not treat noncompliance with a standard of conduct announced solely in a guidance document as itself a violation of law.”  The underlined sentence reflects a position on the role of guidance that other agencies have also emphasized in recent years.  But, given a number of FinCEN regulations are quite high-level and have been extensively interpreted in the FFIEC BSA/AML Manual and other guidance, it remains to be seen how FinCEN will apply the underlined sentence in practice.
  2. The FinCEN statement lists the types of actions FinCEN may take in light of an identified violation, including an informal “warning letter” for less serious violations (i.e., in lieu of a cease and desist order or civil money penalty).
  3. The FinCEN statement identifies the factors FinCEN will consider in determining the appropriate disposition of an AML violation.  Those factors are generally what one would expect — e.g., the pervasiveness, seriousness and practical effects of the violation; the institution’s self-identification, disclosure, and cooperation in connection with the violation (or lack thereof); the institution’s history of prior violations; and actions taken by other agencies with overlapping jurisdiction, including bank regulators.

The full text of the FinCEN statement is available here.

Photo of Nikhil Gore Nikhil Gore

A member of the international arbitration and financial institutions practices, Nikhil V. Gore represents sovereign states and U.S. and global firms in international treaty-based and commercial disputes. He also regularly represents U.S. financial institutions, and the U.S. branches and affiliates of foreign financial…

A member of the international arbitration and financial institutions practices, Nikhil V. Gore represents sovereign states and U.S. and global firms in international treaty-based and commercial disputes. He also regularly represents U.S. financial institutions, and the U.S. branches and affiliates of foreign financial institutions, in investigations and inquiries involving the Federal Reserve, OCC, FDIC, CFPB, and state banking regulators.

Mr. Gore has served as counsel in investment and commercial arbitrations spanning several industries and a variety of regions, including Asia, Eastern Europe, North America, and Southern Africa. Additionally, he has expertise in the law of the sea, and was part of the Covington team that secured an order from the International Tribunal for the Law of the Sea, which required Russia to release three Ukrainian naval vessels and twenty-four servicemen detained in the Black Sea in 2018.

In his financial institutions practice, Mr. Gore has experience with enforcement actions and investigations relating to the Bank Secrecy Act, the federal criminal money laundering statutes, the full range of safety and soundness issues (including, in particular, supervisory reviews of bank control functions), and fair lending and consumer compliance. Mr. Gore is a regular contributor to the firm’s financial services blog.

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