On June 3, 2022, the Financial Crimes Enforcement Network (FinCen) issued an Advance Notice of Proposed Rulemaking proposing public comment on the enactment of a no-action letter process. This Advanced Notice follows FinCen’s Report to Congress submitted in June 2021 that was based on FinCen’s consultation with the Attorney General, State bank supervisors, State credit union supervisors, and other Federal agencies and regulators. In its report, FinCen evaluated the difficulties it faces because of the overlap between its enforcement authority and other regulators. FinCen also examined the benefits and concerns on how a no-action letter process could affect illicit finance risks. FinCen stated that the primary benefits of a no-action letter process “are that it could promote a robust and productive dialogue with the public, spur innovation among financial institutions, and enhance the culture of compliance and transparency in the application and enforcement of BSA.” Ultimately, FinCen concluded that it should establish a rulemaking to create a no-action letter process.
As a part of that rulemaking process, FinCen now seeks public comment on: (1) “whether to establish a no-action letter process,” (2) “what the scope and limits on no-action letters should be,” and (3) “how to best implement the process.” FinCen is also interested in hearing about issues not addressed in the report namely how a no-action letter process should work within FinCen’s existing regulatory framework, FinCen’s jurisdiction, change in circumstances, revocation, denial, confidentiality, and consultation requirements with other regulators and law enforcement agencies. The Advanced Notice lists 44 questions related to these areas such as
- When should FinCen determine whether it has jurisdiction over the submitting party?
- Should a change in business organization, for example when two businesses merge, cause a no-action letter to lose its effect?
- What circumstances would cause a no-action letter to be automatically revoked?
- Should FinCen have an appeals process for no-action letter denials?
- Should FinCen’s no-action letter process be confidential during the pendency of a request?
- How should FinCen consult other regulators and law enforcement agencies about no-action letter requests?
Financial institutions that are required to implement and maintain an AML program could benefit from a no-action letter process as it could provide guidance on how to remain in compliance with BSA reporting requirements—such as SAR—as well as other regulatory obligations.
The comment period is open until August 5, 2022, and FinCen stated in its press release on the Advanced Notice that it “strongly encourages all interested parties, including those that may want to participate in the no-action letter process, if implemented, to submit written comments.”