[Federal Register Volume 69, Number 246 (Thursday, December 23, 2004)]
[Rules and Regulations]
[Pages 76847-76848]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-27739]


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DEPARTMENT OF THE TREASURY

Financial Crimes Enforcement Network

31 CFR Part 103


Interpretive Release No. 2004-02--Unitary Filing of Suspicious 
Activity and Blocking Reports

AGENCY: Financial Crimes Enforcement Network (``FinCEN''), Department 
of the Treasury.

ACTION: Final rule; interpretive release.

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SUMMARY: This FinCEN interpretive guidance clarifies that reports filed 
with the Department of the Treasury's Office of Foreign Assets Control 
(``OFAC'') of blocked transactions with Specially Designated Global 
Terrorists, Specially Designated Terrorists, Foreign Terrorist 
Organizations, Specially Designated Narcotics Trafficker Kingpins, and 
Specially Designated Narcotics Traffickers will be deemed by FinCEN to 
fulfill the requirement to file suspicious activity reports on such 
transactions for purposes of FinCEN's suspicious activity reporting 
rules. However, the filing of a blocking report with OFAC will not be 
deemed to satisfy a financial institution's obligation to file a 
suspicious activity report if the transactions would be reportable 
under FinCEN's suspicious activity reporting rules even if there were 
no OFAC match. Moreover, to the extent that the financial institution 
is in possession of information not included on the blocking report 
filed with OFAC, a separate suspicious activity report should be filed 
with FinCEN including that information.

DATES: This final rule is effective December 23, 2004. The DATES 
section of the rule published on December 14, 2004, at 69 FR 74439 is 
corrected to read as follows:
    DATES: Appendix C is added to part 103 effective December 14, 2004; 
however, Release 2004-01 is not effective until June 13, 2005.

FOR FURTHER INFORMATION CONTACT: Regulatory Policy and Programs 
Division, 1-800-949-2732, Financial Crimes Enforcement Network.

SUPPLEMENTARY INFORMATION: FinCEN is publishing this interpretation to 
clarify that the filing of required blocking reports with OFAC on 
transactions involving an individual or entity designated as a 
Specially Designated Global Terrorist, Specially Designated Terrorist, 
Foreign Terrorist Organization, Specially Designated Narcotics 
Trafficker Kingpin, or Specially Designated Narcotics Trafficker shall 
be deemed to satisfy the requirement, under existing and any 
forthcoming suspicious activity reporting regulations, that financial 
institutions file suspicious activity reports based on the fact of such 
a match.

List of Subjects in 31 CFR Part 103

    Authority delegations (government agencies), Banks, Banking, 
Currency, Investigations, Reporting and recordkeeping requirements.

Department of the Treasury

1 CFR Chapter I

Authority and Issuance

0
For the reasons set forth in the preamble, part 103 of title 31 of the 
Code of Federal Regulations is amended as follows:

PART 103--FINANCIAL RECORDKEEPING AND REPORTING OF CURRENCY AND 
FOREIGN TRANSACTIONS

0
1. The authority citation for part 103 continues to read as follows:

    Authority: 12 U.S.C. 1829b and 1951-1959; 31 U.S.C. 5311-5314 
and 5316-5332; title III, sec. 312, 313, 314, 319, 326, 352. Pub. L. 
107-56, 115 Stat. 307, 21 U.S.C. 1786(q).


0
2. Part 103 is amended by adding a new Intrepretive Release at the end 
of Appendix C to read as follows:

APPENDIX C TO PART 103--INTERPRETIVE RULES

* * * * *

Release No. 2004-02

    This FinCEN interpretive guidance clarifies that reports filed 
with the Department of the Treasury's Office of Foreign Assets 
Control (``OFAC'') of blocked transactions with Specially Designated 
Global Terrorists, Specially Designated Terrorists, Foreign 
Terrorist Organizations, Specially Designated Narcotics Trafficker 
Kingpins, and Specially Designated Narcotics Traffickers will be 
deemed by FinCEN to fulfill the requirement to file suspicious 
activity reports on such transactions for purposes of FinCEN's 
suspicious activity reporting rules. However, the filing of a 
blocking report with OFAC will not be deemed to satisfy a financial 
institution's obligation to file a suspicious activity report if the 
transactions would be reportable under FinCEN's suspicious activity 
reporting rules even if there were no OFAC match. Moreover, to the 
extent that the financial institution is in possession of 
information not included on the blocking report filed with OFAC, a 
separate suspicious activity report should be filed with FinCEN 
including that information.

Background

    The Bank Secrecy Act authorizes the Secretary of the Treasury to 
require financial institutions to report ``any suspicious 
transaction relevant to a possible violation of law or regulation.'' 
\1\ Under this authority, FinCEN has issued regulations requiring 
banks, securities broker-dealers, introducing brokers, casinos, 
futures commission merchants, and money services businesses, to 
report suspicious activity that meets a particular dollar 
threshold.\2\ Each rule includes filing procedures requiring that a 
suspicious transaction shall be reported by completing a suspicious 
activity report and filing it with FinCEN in a central location to 
be determined by FinCEN. Generally, the rules provide a financial 
institution with thirty days from the date of the initial detection 
of suspicious activity to file a report, with an additional thirty 
days if the financial institution is unable to identify a suspect. 
Reports are filed on forms developed for each industry subject to 
the reporting requirement.\3\
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    \1\ See 31 U.S.C. 5318(g)(1).
    \2\ See 31 CFR 103.17-21. The threshold for most financial 
institutions is $5,000; transactions conducted at points of sale for 
money services businesses have a reporting threshold of $2,000. See 
31 CFR 103.20.
    \3\ See TD F 90-22.47 (depository institutions); TD F 22.56 
(money services businesses); FinCEN Form 101 (securities and futures 
industries); FinCEN Form 102 (casinos and card clubs).
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    OFAC administers and enforces economic and trade sanctions based 
on U.S. foreign policy and national security goals against targeted 
foreign countries, terrorists, international narcotics traffickers, 
and those engaged in activities related to the proliferation of 
weapons of mass destruction. OFAC's Reporting, Procedures and 
Penalties Regulations at 31 CFR part 501 require U.S. financial 
institutions to block and file reports on accounts, payments, or 
transfers in which an OFAC-designated country, entity, or individual 
has any interest.\4\ These reports must be filed with OFAC within 
ten business days of the blocking of the property.\5\
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    \4\ 31 CFR 501.603.
    \5\ 31 CFR 501.603(b)(1)(i).
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Prior Guidance

    Transactions involving an individual or entity designated on 
OFAC's list of Specially Designated Nationals and Blocked Persons as 
a global terrorist, terrorist, terrorist organization, narcotics 
trafficker, or narcotics kingpin \6\ may be in furtherance of a 
criminal act, and therefore relevant to a possible violation of law. 
Thus, blocking reports related to such persons also describe

[[Page 76848]]

potentially suspicious activity. In the November 2003 edition of its 
``SAR Activity Review,'' \7\ FinCEN instructed financial 
institutions to file suspicious activity reports on verified matches 
of persons designated by OFAC. While this guidance ensured that the 
relevant information would be available to law enforcement, it also 
resulted in financial institutions being required to make two 
separate filings with the Department of the Treasury--one with OFAC 
pursuant to its Reporting, Procedures and Penalties Regulations, and 
one with FinCEN pursuant to its suspicious activity reporting rules.
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    \6\ The specific designations are as follows: Specially 
designated terrorist; foreign terrorist organization; specially 
designated global terrorist; specially designated narcotics 
trafficker; specially designated narcotics trafficker kingpin. See 
31 CFR parts 595, 597, 598 and the Foreign Narcotics Kingpin Act, 21 
U.S.C. 1901-08, 8 U.S.C. 1182. These categories of designations are 
subject solely to blocking requirements.
    \7\ Issue 6 (Nov. 2003).
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Revised Guidance

    FinCEN is hereby revising its prior guidance to eliminate the 
need for duplicative reporting in cases where a financial 
institution identifies a verified match with individuals or entities 
designated by OFAC. As of the date of publication of this 
interpretation, FinCEN will deem its rules requiring the filing of 
suspicious activity reports to be satisfied by the filing of a 
blocking report with OFAC in accordance with OFAC's Reporting, 
Penalties and Procedures Regulations. OFAC will then provide the 
information to FinCEN for inclusion in the suspicious activity 
reporting database where it will be made available to law 
enforcement. This construction of the suspicious activity reporting 
rules will serve the public interest by enabling FinCEN to obtain 
and provide potentially important information about terrorists and 
major drug traffickers to law enforcement on an expedited basis 
without imposing duplicative reporting burdens on the regulated 
industry.
    Accordingly, a financial institution that files a blocking 
report with OFAC due to the involvement in a transaction or account 
of a person designated as a Specially Designated Global Terrorist, a 
Specially Designated Terrorist, a Foreign Terrorist Organization, a 
Specially Designated Narcotics Trafficker Kingpin, or a Specially 
Designated Narcotics Trafficker, shall be deemed to have 
simultaneously filed a suspicious activity report on the fact of the 
match with FinCEN, in satisfaction of the requirements of the 
applicable suspicious activity reporting rule. This interpretation 
does not affect a financial institution's obligation to identify and 
report suspicious activity beyond the fact of the OFAC match. To the 
extent that the financial institution is in possession of 
information not included on the blocking report filed with OFAC, a 
separate suspicious activity report should be filed with FinCEN 
including that information. This interpretation also does not affect 
a financial institution's obligation to file a suspicious activity 
report even if it has filed a blocking report with OFAC, to the 
extent that the facts and circumstances surrounding the OFAC match 
are independently suspicious--and are otherwise required to be 
reported under existing FinCEN regulations. In those cases, the OFAC 
blocking report would not satisfy a financial institution's 
suspicious activity report filing obligation.
    Further, nothing in this interpretation is intended to preclude 
a financial institution from filing a suspicious activity report to 
disclose additional information concerning the OFAC match,\8\ nor 
does it preclude a financial institution from filing a suspicious 
activity report if the financial institution has reason to believe 
that terrorism or drug trafficking is taking place, even though 
there is no OFAC match. Finally, this interpretation does not apply 
to blocking reports filed to report transactions and accounts 
involving persons owned by, or who are nationals of, countries 
subject to OFAC-administered sanctions programs. Such transactions 
should be reported on suspicious activity reports under the 
suspicious activity reporting rules if, and only, if, the activity 
itself appears to be suspicious under the criteria established by 
the suspicious activity reporting rules.
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    \8\ Such a report would be a voluntary report under the statute 
and regulations. See 31 U.S.C. 5318(g)(3) (extending safe harbor 
protection from civil liability to voluntary filings).

William J. Fox,
Director.
[FR Doc. 04-27739 Filed 12-22-04; 8:45 am]
BILLING CODE 4810-02-P