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April 3, 2002
Special Information Sharing
Section 314 Comments
Financial Crimes Enforcement Network
PO Box 1618
Vienna, VA 22183-1618
Re: Special Information Sharing Procedures to Deter Money Laundering
and Terrorist Activity (67 FR 9873 - 9887)
Dear Sir or Madame:
The Conference of State Bank Supervisors (CSBS) appreciates the
opportunity to comment on Interim and Proposed Rules establishing
special information sharing procedures to deter money laundering and
terrorist activity (Proposal) issued by the Financial Crimes Enforcement
Network (FinCEN), a bureau of the Treasury Department
(Treasury)1. CSBS is the national organization of state
officials responsible for chartering, regulating and supervising the
nation's 6,868 state-chartered commercial and savings banks and 419
state-licensed branches and agencies of foreign banks.
Background
Congress enacted the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of
2001 (Act)2 to fortify existing measures to prevent, detect,
and prosecute international money laundering and the financing of
terrorism. Specifically, Section 314 of the Act requires Treasury to
adopt regulations to encourage information sharing among financial
institutions, regulatory authorities, and law enforcement authorities
for purposes of identifying and reporting activities that may involve
terrorist acts or money laundering activities. FinCEN issued the
Proposal to implement Section 314's provisions.
CSBS Position
Deterring money laundering and terrorist financing activities are
paramount concerns for all Americans generally, and the nation's
financial institutions in particular. CSBS and the State Banking
Departments stand ready to work cooperatively and tirelessly to prevent
the use of this nation's financial services system for money laundering,
terrorism or other forms of corruption. We appreciate Treasury's and
FinCEN's alacrity in implementing many of the Act's provisions. However,
we are concerned that the proposed information sharing protocol omits
several key components that we believe Congress anticipated would be
included. We therefore urge FinCEN to correct these oversights prior to
issuing final regulations.
We refer particularly to Section 103.100 of the Proposal3,
which prescribes procedures for the sharing of information between
financial institutions and federal law enforcement agencies (emphasis
added). This section, and others in the Proposal, make no provisions for
the sharing of information between financial institutions and their
primary regulator (state or federal) or state and local law enforcement.
We believe this interpretation of the Act's statutory requirements is
contrary to the express intent of Congress. For example, Section 314 of
the Act explicitly instructs Treasury to establish a broad cooperative
information sharing network comprising financial institutions, and all
law enforcement and regulatory agencies. Congress recognized that state
and federal regulatory agencies and state and local law enforcement
agencies are critical links to any money laundering and terrorist
financing deterrence program. However, these entities are noticeably
absent from the Proposal. The result is that federal and state
regulators and state and local law enforcement agencies are unable to
participate in the dissemination and exchange of information regarding
threats to our nation's financial services system.
Further corroboration that Congress intended to include all regulators
and law enforcement agencies is found in Subsection (d) of Section 314,
which requires the Treasury to publish a report to the financial
services industry on suspicious financial activities.4 The
report is to include analyses of information derived from sources such
as investigations conducted by Federal, State, and local law enforcement
agencies. Additionally, the Act requires FinCEN to maintain a
government-wide data access service to consist of information such as
records and data maintained by other Federal, State, local and foreign
agencies.5 Moreover, FinCEN is required to analyze and
disseminate the data to appropriate Federal, State, local, and foreign
law enforcement agencies.6 CSBS believes that these
additional statutory mandates are frustrated unless the Proposal is
revised to include federal and state regulatory agencies and state and
local law enforcement agencies in the information sharing protocol.
Conclusion
As currently drafted, the Proposal omits several key components for the
statutorily-prescribed information sharing network to be sufficiently
robust for effectively thwarting money laundering and terrorist
financing activities. We urge FinCEN to correct these omissions prior to
issuing final regulations. We further request that relevant federal and
state regulatory and law enforcement agencies be included in other USA
PATRIOT Act-mandated initiatives implemented by FinCEN in the
future.
Thank you for your consideration and we invite you to call on us if we
can provide additional information.
Best personal regards,
Neil Milner
President and CEO
________________________________________
[1] 67 Fed. Reg. 9873 - 9874, (March 4, 2002).
[2] Pub. L. No. 107-56. (Oct. 26, 2001).
[3] 67 Fed. Reg. 9884, (March 4, 2002).
[4] Act, Sec. 361.
[5] Id.
[6] Id. |
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