Federal Register / Vol. 62, No. 58 / Wednesday, March 26, 1997 / Notices 143

1 FinCEN and the Federal Supervisory Agencies

have all published rules requiring such reporting.

See the rules publshed by FinCEN, the Board, OCC,

FDIC, OTS and NCUA, respectively, at: 61 FR 4326

(February 5, 1996); 61 FR 4338 (February 5, 1996);

61 FR 4332 (February 5, 1996); 61 FR 6095

(February 16, 1996); 61 FR 6100 February 16, 1996);

61 FR 11526 (March 21, 1996).

2In addition, the Federal Supervisory Agencies

have modified their existing Privacy Act Systems of

Records to reflect the new interagency suspicious

activity reporting process and the use of the

database maintained and managed by FinCEN

pursuant to the agreement. See the notices

published by the Board, OCC, FDIC, OTS, and

NCUA, respectively, at 60 FR 44347 (August 25,

1995); 60 FR 64239 (December 14, 1995); 60 FR

52001 (October 4, 1995); 60 FR 64241 (December

14, 1995) and 61 FR 8689 (March 5, 1996).

3In accordance with 31 U.S.C. 5318(g), data from

the SAR System is exchanged, retrieved, and

disseminated, both manually and electronically

among FinCEN, the Federal Supervisory Agencies,

appropriate Federal, state, and local law

enforcement agencies, and state banking

supervisory agencies. Section 5318(g)(4)(B)

specifically require that the agency designated as

the repository for suspicious transaction reports

refer those reports to any appropriate law

enforcement or supervisory agency.

[FR Doc. 97–7557 Filed 3–25–97; 8:45 am]

BILLING CODE 4910–60–M

DEPARTMENT OF THE TREASURY

Financial Crimes Enforcement

Network

Privacy Act of 1974; System of

Records

AGENCY:Departmental Offices, Treasury.

ACTION: Notice of a proposed New

Privacy Act system of records.

SUMMARY: In accordance with the

Privacy Act of 1974, as amended, 5

U.S.C. 552a, the Financial Crimes

Enforcement Network (‘‘FinCEN’’),

Department of the Treasury (Treasury),

gives notice of a proposed new

Treasury—wide system of records

entitled the ‘‘Suspicious Activity

Reporting System (the ‘‘SAR System’’)—

Treasury/DO.212.’’

DATES: Comments must be received no

later than April 25, 1997. The proposed

system of records will become effective

without further notice April 25, 1997,

unless comments are received that

result in a contrary determination and

notice is published to that effect.

ADDRESSES: Written comments should

be sent to Office of Legal Counsel,

FinCEN, 2070 Chain Bridge Road, Suite

200, Vienna, VA 22182–2536, Attention:

SAR System of Records. Comments will

be made available for inspection and

copying by appointment. Persons

wishing such an opportunity should call

Eileen Dolan, (703) 905–3590.

FOR FURTHER INFORMATION CONTACT:

Cynthia A. Langwiser, AttorneyAdvisor, Office of Legal Counsel,

FinCEN, (703) 905–3582.

SUPPLEMENTARY INFORMATION:

This new Privacy Act system of

records is proposed to be established for

the retention, retrieval, and

dissemination of information, reported

by financial institutions or certain of

their affiliates to the Federal

Government, concerning suspicious

transactions and known or suspected

criminal violations occurring by, at, or

through such institutions. Suspicious

transaction reporting is required by

rules issued by FinCEN and the five

supervisory agencies that examine and

regulate the safety and soundness of

financial institutions, namely the Board

of Governors of the Federal Reserve

System (the ‘‘Board’’), the Office of the

Comptroller of the Currency (‘‘OCC’’),

the Federal Deposit Insurance

Corporation (‘‘FDIC’’), the Office of

Thrift Supervision (‘‘OTS’’), and the

National Credit Union Administration

(‘‘NCUA’’) (collectively, the ‘‘Federal

Supervisory Agencies’’).1

The requirements of FinCEN and the

Federal Supervisory Agencies create an

integrated system for reporting

suspicious activity and known or

suspected crimes. Under these

requirements, financial institutions file

a single uniform Suspicious Activity

Report (a ‘‘SAR’’) with FinCEN.

Previously, a financial institution

reporting a known or suspected

violation of law was required to file

multiple copies of criminal referral

forms with its Federal financial

regulatory agency and Federal law

enforcement agencies. Each Federal

financial regulatory agency had

promulgated a different form. Under the

new system, a financial institution

meets its obligation to report a known

or suspected violation of law by filing

one copy of a SAR with FinCEN.

SAR records are maintained in an

automated database that is operated by

agreement among FinCEN and the

Federal Supervisory Agencies. FinCEN

manages the automated SAR System,

which is housed at the Internal Revenue

Service Computing Center in Detroit,

Michigan. The SAR System contains the

suspicious activity information filed by

financial institutions and related

information concerning criminal

prosecutions, civil actions, enforcement

proceedings and investigations of

concern to FinCEN and the Federal

Supervisory Agencies. Currently, these

categories of records are included in an

existing Privacy Act system of records,

FinCEN Data Base, Treasury/DO .200.2

However, in order to provide more

current and detailed information about

these categories of records, a new and

separate Privacy Act system of records

is being created.

This single information system for the

use of such reports is a key part of the

integrated system. The SAR System will

permit enhanced analysis and tracking

of the information contained in the

reports, and rapid dissemination to

appropriate Federal and state law

enforcement and supervisory agencies.

As a central repository for investigatory

or enforcement information, the SAR

System will permit analysis, retrieval,

and dissemination of information by the

Federal Supervisory Agencies, by

appropriate Federal, state, and local law

enforcement agencies, state banking

supervisory agencies, and by FinCEN

itself (SAR Users).3 In addition, the SAR

System will permit dissemination of

information, where appropriate, to

non—United States financial regulatory

agencies and law enforcement

authorities. The SAR System will

thereby improve efforts to prevent,

identify, and enforce the laws against

financial wrongdoing.

Because records in this database are

generated under 31 U.S.C. 5318(g)(4),

which authorizes the Secretary of the

Treasury to designate a single agency to

whom suspicious activity reports shall

be made, access to and use of these

records will be governed by the routine

uses set forth in this notice.

Accordingly, the routine uses reflect

sharing among Federal Supervisory

Agencies and law enforcement

authorities. Additionally, the safeguards

provide that on—line access to the

computerized database is limited to

authorized individuals who have been

issued a password and nontransferable

identifier.

Because information in the SAR

System may be retrieved by personal

identifier, the Privacy Act of 1974

requires the Treasury Department to

give general notice and seek public

comments about creation of this new

separate system of records. A new

system of records report, as required by

5 U.S.C. 552a(r), has been submitted to

the Committee on Government Reform

and Oversight of the House of

Representatives, the Committee on

Governmental Affairs of the Senate, and

the Office of Management and Budget

(‘‘OMB’’). See Appendix I to OMB

Circular A–130, ‘‘Federal Agency

Responsibilities for Maintaining

Records About Individuals,’’ 61 FR

6428, 6435 (February 20, 1996). The

proposed system of records, Suspicious

Activity Reporting System—Treasury/
144 Federal Register / Vol. 62, No. 58 / Wednesday, March 26, 1997 / Notices

DO 212, is published in its entirety

below.

Dated: February 3, 1997.

Alex Rodriguez,

Deputy Assistant Secretary (Administration).

TREASURY/DO .212

SYSTEM NAME:

Suspicious Activity Reporting System

(the ‘‘SAR System’’).

SYSTEM LOCATION:

The SAR System is housed at the

Internal Revenue Service Computing

Center (‘‘DCC’’) in Detroit, Michigan and

is managed by the Financial Crimes

Enforcement Network (‘‘FinCEN’’), 2070

Chain Bridge Road, Suite 200, Vienna,

VA 22182, with the assistance of the

staff of DCC.

CATEGORIES OF INDIVIDUALS COVERED BY THE

SYSTEM:

The SAR System contains information

about—(1) Individuals or entities that

are known perpetrators or suspected

perpetrators of a known or suspected

Federal criminal violation, or pattern of

criminal violations, committed or

attempted against a financial institution,

or participants in a transaction or

transactions conducted through the

financial institution, that has been

reported by the financial institution,

either voluntarily or because such a

report is required under the rules of

FinCEN, one or more of the Federal

Supervisory Agencies (the Board of

Governors of the Federal Reserve

System (‘‘the Board’’), the Office of the

Comptroller of the Currency (‘‘OCC’’),

the Federal Deposit Insurance

Corporation (‘‘FDIC’’), the Office of

Thrift Supervision (‘‘OTS’’), and the

National Credit Union Administration

(‘‘NCUA’’) (collectively, the ‘‘Federal

Supervisory Agencies’’)), or both.

(2) Individuals or entities that are

participants in transactions, conducted

or attempted by, at or through a

financial institution, that have been

reported because the institution knows,

suspects, or has reason to suspect that:

(a) the transaction involves funds

derived from illegal activities, the

transaction is intended or conducted to

hide or disguise funds or assets derived

from illegal activities as part of a plan

to violate or evade any law or regulation

or to avoid any transaction reporting

requirement under Federal law;(b) the

transaction is designed to evade any

regulations promulgated under the Bank

Secrecy Act, Pub. L. 91–508, as

amended, codified at 12 U.S.C. 1829b,

12 U.S.C. 1951–1959, and 31 U.S.C.

5311–5330; or (c) the transaction has no

business or apparent lawful purpose or

is not the sort in which the particular

customer would normally be expected

to engage, and the financial institution

knows of no reasonable explanation for

the transaction after examining the

available facts, including the

background and possible purpose of the

transaction;

(3) Individuals who are directors,

officers, employees, agents, or otherwise

affiliated with a financial institution;

(4) Individuals or entities that are

actual or potential victims of a criminal

violation or series of violations;

(5) Individuals who are named as

possible witnesses in connection with

matters arising from any such report;

(6) Individuals or entities named as

preparers of any such report;

(7) Individuals or entities named as

persons to be contacted for assistance by

government agencies in connection with

any such report;

(8) Individuals or entities who have or

might have information about

individuals or criminal violations

described above; and

(9) Individuals or entities involved in

evaluating or investigating any matters

arising from any such report.

CATEGORIES OF RECORDS IN THE SYSTEM:

The SAR System contains information

reported to FinCEN by financial

institutions on a Suspicious Activity

Report (‘‘SAR’’) required under the

authority of FinCEN or one or more of

the Federal Supervisory Agencies, or

both. SARs contain information about

the categories of persons or entities

specified in ‘‘Categories of Individuals

Covered by the System.’’ The SAR

System may also contain records

pertaining to criminal prosecutions,

civil actions, enforcement proceedings,

and investigations resulting from or

relating to SARs. Additionally, it will

contain records pertaining to criminal

prosecutions, civil actions, enforcement

proceedings, and investigations relating

to institutions required to file reports or

under the supervision of one or more of

the Federal Supervisory agencies.

AUTHORITY FOR MAINTENANCE OF THE SYSTEM:

The system is established and

maintained in accordance with 31

U.S.C. 5318(g); 31 CFR part 103; 31

U.S.C. 321; and Department of the

Treasury Order 105–08.

PURPOSE(S):

The requirements of FinCEN and the

Federal Supervisory Agencies create an

integrated process for reporting

suspicious activity and known or

suspected crimes by, at, or through

depository institutions and certain of

their affiliates. The process is based on

a single uniform SAR filed with

FinCEN.

The SAR System has been created, as

a key part of this integrated reporting

process, to permit coordinated and

enhanced analysis and tracking of such

information, and rapid dissemination of

SAR information to appropriate law

enforcement and supervisory agencies.

The provisions of 31 U.S.C.

5318(g)(4)(B) specifically require that

the agency designated as repository for

SARs refer those reports to any

appropriate law enforcement or

supervisory agency.

Data from the SAR System will be

exchanged, retrieved, and disseminated,

both manually and electronically among

FinCEN, the Federal Supervisory

Agencies, appropriate Federal, state,

and local law enforcement agencies, and

state banking supervisory agencies.

Agencies to which information will be

referred electronically, which in certain

cases may involve electronic transfers of

batch information, include the Federal

Supervisory Agencies, the Federal

Bureau of Investigation (FBI), the

Criminal Investigation Division of the

Internal Revenue Service, the United

States Secret Service, the United States

Customs Service, the Executive Office of

the United States Attorneys and the

Offices of the 93 United States

Attorneys, and state bank supervisory

agencies and certain state law

enforcement agencies, which have

entered into appropriate agreements

with FinCEN. (The FBI and Secret

Service may receive electronic transfers

of batch information as forms are filed

to permit those agencies more efficiently

to carry out their investigative

responsibilities.) Organizations to which

information is regularly disseminated

are referred to as SAR System Users. It

is anticipated that information from the

SAR system will also be disseminated to

other appropriate Federal, state, or local

law enforcement organizations and

regulatory agencies that enter into

appropriate agreements with FinCEN. In

addition, information may be

disseminated to non-United States

financial regulatory and law

enforcement agencies.

ROUTINE USES OF RECORDS MAINTAINED IN THE

SYSTEM, INCLUDING CATEGORIES OF USERS AND

THE PURPOSES OF SUCH USES:

These records and information in

these records may be used to:

(1) Provide information or records,

electronically or manually, to SAR

System Users relevant to the

enforcement and supervisory programs

and operations of those Users;

(2) Provide SAR System Users and

their Executive Departments with
Federal Register / Vol. 62, No. 58 / Wednesday, March 26, 1997 / Notices 145

reports that indicate the number,

amount, individual identity, and other

details concerning potential violations

of the law that have been the subject of

Suspicious Activity Reports;

(3) Provide information or records to

any appropriate domestic or non-United

States governmental agency or selfregulatory organization charged with the

responsibility of administering law or

investigating or prosecuting violations

of law, or charged with the

responsibility of enforcing or

implementing a statute, rule, regulation,

order, or policy, or charged with the

responsibility of issuing a license,

security clearance, contract, grant, or

benefit, when relevant to the

responsibilities of these agencies or

organizations.

(4) Provide information or records,

when appropriate, to international and

foreign governmental authorities in

accordance with law and formal or

informal international agreement;

(5) Disclose on behalf of a SAR

System User, the existence, but not

necessarily the content, of information

or records to a third party, in cases

where a SAR System User is a party or

has a direct interest and where the SAR

System User has concluded that such

disclosure is necessary;

(6) Provide information or records to

the Department of Justice, or in a

proceeding before a court, adjudicative

body, or other administrative body

before which the SAR System User is

authorized to appear, when (a) the SAR

System User, or any component thereof;

or (b) any employee of the SAR System

User in his or her official capacity; or (c)

any employee of the SAR System User,

where the Department of Justice or the

SAR System User has agreed to

represent the employee; or (d) the

United States is a party to litigation or

has an interest in such litigation, when

the SAR System User determines that

litigation is likely to affect the SAR

System User or any of its components

and the use of such records by the

Department of Justice or the SAR

System User is deemed by the SAR

System User to be relevant and

necessary to the litigation, provided,

however, that in each case it has been

determined that the disclosure is

compatible with the purpose for which

the records were collected;

(7) Disclose information or records to

individuals or entities to the extent

necessary to elicit information pertinent

to the investigation, prosecution, or

enforcement of civil or criminal statutes,

rules, regulations, or orders;

(8) In accordance with Executive

Order 12968 (August 2, 1995), provide

information or records to any

appropriate government authority in

connection with investigations and

reinvestigations to determine eligibility

for access to classified information to

the extent relevant for matters that are

by statute permissible subjects of

inquiry.

(9) Provide, when appropriate,

information or records to a bar

association, or other trade or

professional organization performing

similar functions, for possible

disciplinary action;

(10) Provide information or records to

the Department of State and to the

United States Intelligence Community,

within the meaning of Executive Order

12333 (December 4, 1981) to further

those agencies’ efforts with respect to

national security and international

narcotics trafficking;

(11) Furnish analytic and statistical

reports to government agencies and the

public providing information about

trends and patterns derived from

information contained on Suspicious

Activity Reports, in a form in which

individual identities are not revealed;

and

(12) Disclose information or records to

any person with whom FinCEN, the

DCC or a SAR System User contracts to

provide consulting, data processing,

clerical, or secretarial functions relating

to the official programs and operations

of FinCEN, DCC, or the SAR System

User.

POLICIES AND PRACTICES FOR STORING,

RETRIEVING, ACCESSING, RETAINING, AND

DISPOSING OF RECORDS IN THE SYSTEM:

STORAGE:

Records are maintained in magnetic

media and on hard paper copy.

RETRIEVABILITY:

Data in the SAR System may be

retrieved by sectionalized data fields

(i.e., name of financial institution or

holding company, type of suspected

violation, individual suspect name,

witness name, and name of individual

authorized to discuss the referral with

government officials) or by the use of

search and selection criteria.

SAFEGUARDS:

The system is located in a guarded

building that has restricted access.

Access to the computer facilities and

any paper records is subject to

additional physical safeguards that

restrict access. Access to any electronic

records in the system is restricted by

means of passwords and nontransferable identifiers issued to

authorized SAR System Users. The

system complies with all applicable

security requirements of the Department

of the Treasury.

RETENTION AND DISPOSAL:

Records in this system will be

updated periodically to reflect changes,

and will be maintained in electronic

form as long as needed for the purpose

for which the information was collected.

Records will then be disposed of in

accordance with applicable law.

SYSTEM MANAGER AND ADDRESS:

Deputy Director, Financial Crimes

Enforcement Network, United States

Department of the Treasury, 2070 Chain

Bridge Road, Suite 200, Vienna, Virginia

22182.

NOTIFICATION PROCEDURE:

This system is exempt from

notification requirements, record access

requirements, and requirements that an

individual be permitted to contest its

contents, pursuant to the provisions of

5 U.S.C. § 552a(j)(2) and (k)(2).

RECORD ACCESS PROCEDURES:

See ‘‘Notification Procedure’’ above.

CONTESTING RECORD PROCEDURES:

See ‘‘Notification Procedure’’ above.

RECORD SOURCE CATEGORIES:

Records in this system may be

provided by or obtained from:

individuals; financial institutions and

certain of their affiliates; Federal

Supervisory Agencies; State financial

institution supervisory agencies;

domestic or foreign governmental

agencies; foreign or international

organizations; and commercial sources.

Pursuant to the provisions of 5 U.S.C.

552a(j)(2) and (k)(2), this system is

exempt from the requirement that the

record source categories be disclosed.

EXEMPTIONS CLAIMED FOR THE SYSTEM:

This system is exempt from 5 U.S.C.

552a(c)(3), (c)(4), (d)(1), (d)(2), (d)(3),

(d)(4), (e)(1), (e)(2), (e)(3), (e)(4)(G),

(e)(4)(H), (e)(4)(I), (e)(5), (e)(8), (f) and (g)

of the Privacy Act pursuant to 5 U.S.C.

552a(j)(2) and (k)(2).

[FR Doc. 97–7559 Filed 3–25–97; 8:45 am]

BILLING CODE: 4820–03–F