Federal Register / Vol. 74, No. 44 / Monday, March 9, 2009 / Proposed Rules 10161 

7See 31 CFR 103.15 to 103.21. See also, 12 CFR 

208.62 (FRB); 12 CFR 353.3 (FDIC); 12 CFR 748.1 

(NCUA); 12 CFR 21.11 (OCC); and 12 CFR 563.180 

(OTS). 

8Because foreign branches of U.S. banks are 

regarded as foreign banks for purposes of the BSA, 

under this guidance, they are ‘‘affiliates’’ that are 

not subject to a SAR regulation. Accordingly, a U.S. 

bank that has filed a SAR may not share the SAR, 

or any information that would reveal the existence 

of the SAR, with its foreign branches. 

1This single docket number is shared by three 

related documents (a notice of proposed 

rulemaking, and this and another piece of proposed 

guidance related to that notice of proposed 

rulemaking) published simultaneously by FinCEN 

in today’s Federal Register. Accordingly, 

commenters may submit comments related to any 

of the proposals, or any combination of proposals, 

in a single comment letter. 

2See 31 CFR 103.15 to 103.21. 

3 ‘‘Guidance on Sharing of Suspicious Activity 

Reports by Securities Broker-Dealers, Futures 

Continued 

sharing of a SAR or, more broadly, any 

information that would reveal the 

existence of a SAR, with a head office 

or controlling company (including 

overseas) promotes compliance with the 

applicable requirements of the BSA by 

enabling the head office or controlling 

company to discharge its oversight 

responsibilities with respect to 

enterprise-wide risk management, 

including oversight of a depository 

institution’s compliance with applicable 

laws and regulations. 

The January 2006 Guidance deferred 

taking a position on whether a 

depository institution is permitted to 

share a SAR with affiliates and directed 

institutions not to share with such 

affiliates. FinCEN has now concluded 

that a depository institution that has 

filed a SAR may share the SAR, or any 

information that would reveal the 

existence of the SAR, with an affiliate, 

as defined herein, provided the affiliate 

is subject to a SAR regulation.7 The 

sharing of SARs with such affiliates 

facilitates the identification of 

suspicious transactions taking place 

through the depository institution’s 

affiliates that are subject to a SAR rule. 

Therefore, such sharing within the 

depository institution’s corporate 

organizational structure is consistent 

with the purposes of Title II of the 

BSA.8

It is not consistent with the purposes 

of Title II of the BSA for an affiliate that 

has received a SAR from a depository 

institution that has filed the SAR to 

further share that SAR, or any 

information that would reveal the 

existence of that SAR with an affiliate 

of its own, even if that affiliate is subject 

to a SAR rule. 

As is the case with sharing SARs with 

head offices and controlling companies, 

there may be circumstances under 

which a depository institution, its 

affiliate, or both entities would be liable 

for direct or indirect disclosure by the 

affiliate of a SAR or any information 

that would reveal the existence of a 

SAR. Therefore, the depository 

institution, as part of its internal 

controls, should have written 

confidentiality agreements in place 

ensuring that its affiliates protect the 

confidentiality of the SAR through 

appropriate internal controls. 

Consistent with the BSA and the 

implementing regulations issued by 

FinCEN and the Federal Banking 

Agencies, a SAR, or any information 

that would reveal the existence of a 

SAR, must not be disclosed, even under 

this guidance, if the depository 

institution has reason to believe it may 

be disclosed to any person involved in 

the suspicious activity that is the subject 

of the SAR. 

Dated: February 27, 2009. 

James H. Freis, Jr., 

Director, Financial Crimes Enforcement 

Network. 

[FR Doc. E9–4693 Filed 3–6–09; 8:45 am] 

BILLING CODE 4810–02–P 

DEPARTMENT OF THE TREASURY 

31 CFR Part 103 

[Docket Number: TREAS–FinCen–2008– 

0022] 

Interpretive Guidance—Sharing 

Suspicious Activity Reports by 

Securities Broker-Dealers, Mutual 

Funds, Futures Commission 

Merchants, and Introducing Brokers in 

Commodities With Certain U.S. 

Affiliates 

AGENCY: Financial Crimes Enforcement 

Network, Department of the Treasury. 

ACTION: Proposed guidance. 

SUMMARY: The Financial Crimes 

Enforcement Network (‘‘FinCEN’’) of the 

Department of the Treasury, after 

consulting with staffs of the U.S. 

Securities and Exchange Commission 

(‘‘SEC’’) and the Commodity Futures 

Trading Commission (‘‘CFTC’’), is 

issuing for comment this proposed 

interpretive guidance. Published 

elsewhere in this part of the Federal 

Register are proposed rules clarifying 

the scope of the statutory prohibition on 

the disclosure by a financial institution 

of a report of a suspicious transaction 

set forth in the Bank Secrecy Act 

(‘‘BSA’’). The proposed rules include a 

provision which states that the 

prohibition does not apply when a 

securities broker-dealer, mutual fund, 

futures commission merchant, or 

introducing broker in commodities 

shares a suspicious activity report 

(‘‘SAR’’), or any information that would 

reveal the existence of a SAR, within its 

corporate organizational structure for 

purposes consistent with Title II of the 

BSA, as determined by regulation or 

guidance. The proposed guidance 

interprets this provision to permit a 

securities broker-dealer, mutual fund, 

futures commission merchant, or 

introducing broker in commodities to 

share a SAR with its affiliates that are 

also subject to SAR rules. 

DATES: Written comments on the 

proposed guidance may be submitted on 

or before June 8, 2009. 

ADDRESSES: You may submit comments, 

identified by docket number TREAS– 

FinCen–2008–0022,1 by any of the 

following methods: 

• Federal e-rulemaking portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• E-mail: 

regcomments@fincen.treas.gov. Include 

docket number TREAS–FinCen–2008– 

0022 in the subject line of the message. 

• Mail: FinCEN, P.O. Box 39, Vienna, 

VA 22183. Include docket number 

TREAS–FinCen–2008–0022 in the body 

of the text. 

FOR FURTHER INFORMATION CONTACT: 

Regulatory Policy and Programs 

Division, FinCEN, (800) 949–2732. 

SUPPLEMENTARY INFORMATION: 

I. Background 

FinCEN, through its authority under 

the BSA as delegated by the Secretary of 

the Treasury, may require financial 

institutions to keep records and file 

reports that FinCEN determines have a 

high degree of usefulness in criminal, 

tax, or regulatory investigations or 

proceedings, or for intelligence or 

counterintelligence activities to protect 

against international terrorism. Within 

this framework, FinCEN may require 

financial institutions to file SARs and 

has issued rules implementing that 

specific authority with respect to certain 

types of financial institutions.2

Sharing Within the Corporate 

Organizational Structure 

In January 2006, FinCEN, after 

consulting with the staffs of the 

Securities Exchange Commission 

(‘‘SEC’’) and the Commodity Futures 

Trading Commission (‘‘CFTC’’), 

determined that, subject to certain 

exceptions or qualifications, a securities 

broker-dealer, futures commission 

merchant, or introducing broker in 

commodities may share a SAR with its 

parent entities, both domestic and 

foreign.3 Moreover, guidance issued by 


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10162 Federal Register / Vol. 74, No. 44 / Monday, March 9, 2009 / Proposed Rules 

Commission Merchants, and Introducing Brokers in 

Commodities’’ (January 20, 2006). 

4 ‘‘Control’’ for the purposes of the October 2006 

Guidance is defined in section 2(a)(9) of the 

Investment Company Act of 1940 (15 U.S.C. 80a– 

2(a)(9)) to mean ‘‘the power to exercise a controlling 

influence over the management or policies of a 

company, unless such power is solely the result of 

an official position with such company.’’ A mutual 

fund typically is organized and operated by an 

investment adviser that controls the fund. By 

contrast, an investment adviser that performs 

limited functions in managing a mutual fund’s 

securities portfolio (also known as a ‘‘subadviser’’) 

would not typically control the fund and therefore 

would be outside the scope of the guidance. 

5FIN–2006–G013, ‘‘Frequently Asked Questions: 

Suspicious Activity Reporting Requirements for 

Mutual Funds’’ (October 4, 2006). 

6 ‘‘Interagency Guidance on Sharing Suspicious 

Activity Reports with Head Offices and Controlling 

Companies’’ (January 20, 2006). 

7Specifically, we note that in both the mutual 

fund SAR rule adopting release (71 FR 26213) and 

the October 2006 guidance, FinCEN acknowledged 

the role of transfer agents and other service 

providers in the suspicious activity monitoring, 

detection, and reporting obligations of mutual 

funds. These service providers may be unaffiliated 

or affiliated with the mutual funds. The October 

2006 guidance and adopting release clarified that a 

mutual fund may contractually delegate its SAR 

functions to such an agent, although the mutual 

fund remains responsible for assuring compliance 

with the rule, and therefore must monitor actively 

the performance of its reporting obligations. 

8The proposed guidance interprets a provision in 

the proposed SAR regulations. The final guidance 

issued will be modified to correspond to any 

changes made in the final SAR regulations. 

9For the purposes of this proposed guidance, an 

‘‘affiliate’’ is effectively defined as a company under 

common control with, or a subsidiary of, the 

securities broker-dealer, mutual fund, futures 

commission merchant, or introducing broker in 

commodities. ‘‘Affiliate’’ does not include holding 

companies because sharing with these entities is 

already addressed in the 2006 Guidance. 

10See 31 CFR 103.15 to 103.21. See also, 12 CFR 

208.62 (FRB); 12 CFR 353.3 (FDIC); 12 CFR 748.1 

(NCUA); 12 CFR 21.11 (OCC); and 12 CFR 563.180 

(OTS). 

FinCEN in consultation with the SEC in 

October 2006 stated that a U.S. mutual 

fund may share a SAR with the 

investment adviser that controls the 

fund, whether domestic or foreign, so 

that the investment adviser could 

implement enterprise-wide risk 

management and compliance functions 

over all of the mutual funds that it 

controls 4 and improve its identification 

and reporting of suspicious activity.5

FinCEN also issued joint guidance with 

the Board of Governors of the Federal 

Reserve System (‘‘FRB’’), the Federal 

Deposit Insurance Corporation 

(‘‘FDIC’’), the Office of the Comptroller 

of the Currency (‘‘OCC’’), and the Office 

of Thrift Supervision (‘‘OTS’’), 

concluding that, subject to certain 

exceptions or qualifications, a U.S. 

branch or agency of a foreign bank may 

share a SAR with its head office outside 

the United States, and a U.S. bank or 

savings association may disclose a SAR 

to its controlling company, no matter 

where the entity or party is located.6

Nothing in the proposed guidance for 

sharing with affiliates supersedes any of 

the guidance mentioned in the 

preceding paragraph, or the adopting 

release for the mutual fund SAR rule.7

These guidance documents reflected a 

recognition by FinCEN, the FDIC, the 

FRB, the OCC, the OTS, the SEC, and 

the CFTC (referred to collectively in the 

proposed guidance as the ‘‘Federal 

regulators’’) that a head office, 

controlling entity or party, or parent 

entity of a depository institution, 

broker-dealer, mutual fund, futures 

commission merchant, and introducing 

broker in commodities, has oversight 

responsibilities with respect to 

enterprise-wide risk management. These 

responsibilities include a valid need to 

review compliance by U.S.-based 

depository institutions, broker-dealers, 

mutual funds, futures commission 

merchants, and introducing brokers 

with legal requirements to identify and 

report suspicious activity. 

The guidance documents regarding 

the sharing of SARs with head offices, 

controlling companies or parties, and 

parent entities (referred to here as the 

‘‘2006 Guidance’’) expressly noted that 

the sharing of a SAR with a non-U.S. 

entity raises concerns about the ability 

of the foreign entity to protect the SAR 

in light of possible requests for 

disclosure abroad that may be subject to 

foreign law. The 2006 Guidance also 

provides that the recipient may not 

disclose further any SAR, or the fact that 

such a report has been filed; however, 

the recipient may disclose without 

permission underlying information. The 

2006 Guidance also stated that FinCEN 

and the other Federal regulators were 

considering whether a financial 

institution may share a SAR with other 

entities within the financial institution’s 

corporate organization located inside 

the United States and those located 

abroad, and instructed financial 

institutions not to share SARs with such 

entities until further guidance was 

issued. 

Proposed Regulatory Changes 

In proposed regulations issued today, 

FinCEN is proposing to revise the 

regulations implementing the BSA 

regarding the confidentiality of a SAR to 

clarify, among other things, the scope of 

the statutory prohibition against the 

disclosure by a financial institution of a 

SAR. These rules include a provision 

clarifying that the statutory prohibition 

does not apply to sharing by a securities 

broker-dealer, mutual fund, futures 

commission merchant, or introducing 

broker in commodities, or any director, 

officer, employee, or agent thereof, of a 

SAR, or any information that would 

reveal the existence of a SAR, within the 

corporate organizational structure of a 

securities broker-dealer, mutual fund, 

futures commission merchant, or 

introducing broker in commodities for 

purposes consistent with Title II of the 

BSA, as determined by regulation or in 

guidance, provided that no person 

involved in any reported suspicious 

transaction is notified that the 

transaction has been reported. 

II. Proposed Guidance 

This proposed guidance interprets the 

general statement in the proposed SAR 

confidentiality rules 8 that a securities 

broker-dealer, mutual fund, futures 

commission merchant, or introducing 

broker in commodities, or any director, 

officer, employee, or agent thereof, may 

share a SAR, or information that reveals 

the existence of a SAR, within its 

corporate organizational structure for 

purposes consistent with Title II of the 

BSA. First, the proposed guidance 

acknowledges that the 2006 Guidance 

regarding securities broker-dealers, 

mutual funds, futures commission 

merchants, and introducing brokers in 

commodities continues to be applicable. 

It explains that sharing of a SAR or 

information that reveals the existence of 

a SAR by a securities broker-dealer, 

mutual fund, futures commission 

merchant, or introducing broker in 

commodities with its head office or its 

controlling company, whether domestic 

or foreign, promotes compliance with 

the BSA by enabling the head office or 

controlling company to discharge its 

oversight responsibilities with respect to 

enterprise-wide risk management, 

including oversight of the securities 

broker-dealer’s, mutual fund’s, futures 

commission merchant’s, and 

introducing broker in commodities’ 

compliance with applicable laws and 

regulations. 

Next, the guidance explains that 

FinCEN also has concluded that the 

proposed regulations may be interpreted 

to permit a securities broker-dealer, 

mutual fund, futures commission 

merchant, and introducing broker in 

commodities that has filed a SAR to 

share the SAR, or any information that 

would reveal the existence of the SAR, 

with an affiliate 9 that is subject to a 

SAR regulation.10

FinCEN has concluded that such 

sharing within a corporate organization 

is consistent with two important 

purposes of the BSA: promoting efforts 

to detect and report money laundering 

and terrorist financing by financial 

institutions that are subject to the BSA, 


pwalker on PROD1PC71 with PROPOSALS2
Federal Register / Vol. 74, No. 44 / Monday, March 9, 2009 / Proposed Rules 10163 

11For example, the sharing of a SAR eliminates 

the need to create a separate summary document 

which, if shared, might inadvertently reveal the 

existence of a SAR itself. 

12See the Notice of Proposed Rulemaking 

published elsewhere in today’s Federal Register. 

13FinCEN does not intend this guidance to permit 

the sharing of SARs with affiliates where such 

sharing would subject the SARs to the laws of a 

foreign jurisdiction, and elsewhere in this notice 

seeks specific comment on whether as drafted, the 

guidance meets that purpose based on present 

industry practices. 

14For purposes of the guidance text below, all 

citations to Title 31 SAR regulations are references 

to the amended regulations we anticipate 

promulgating as discussed in the above section, 

Proposed Regulatory Changes. 

1For purposes of this guidance, ‘‘affiliate’’ of a 

person means any company under common control 

with, or controlled by, such person. ‘‘Control’’ of a 

company means the power to exercise a controlling 

influence over the management or policies of a 

company whether through ownership of securities, 

by contract, or otherwise. Any person who owns 

beneficially, either directly or through one or more 

controlled companies, more than 25 percent of the 

voting securities of any company is presumed to 

control the company. Any person who does not 

own more than 25 percent of the voting securities 

of any company will be presumed not to control the 

company. 

and ensuring the confidentiality of a 

SAR or any information that would 

reveal the existence of a SAR. The 

sharing by a securities broker-dealer, 

mutual fund, futures commission 

merchant, or introducing broker in 

commodities of a SAR, or any 

information that would reveal the 

existence of a SAR, can facilitate the 

identification of suspicious transactions 

taking place through the securities 

broker-dealer’s, mutual fund’s, futures 

commission merchant’s, or introducing 

broker in commodities’ affiliates that are 

also subject to SAR reporting 

requirements. Although the sharing of 

information underlying the filing of a 

SAR has never been prohibited under 

the BSA, it is understood that the 

sharing of a SAR itself pursuant to this 

proposed guidance may entail greater 

efficiencies.11

Moreover, the proposed SAR 

confidentiality rules provide that a 

‘‘SAR, and any information that would 

reveal the existence of a SAR, are 

confidential.’’ 12 Accordingly, affiliates 

subject to a SAR rule are prohibited 

from disclosing any SAR or information 

that a SAR was filed, including both 

SARs they have filed, and any SARs 

they have received that have been filed 

by others. In addition, because the 

guidance applies only to the sharing of 

a SAR by the securities broker-dealer, 

mutual fund, futures commission 

merchant, and introducing broker in 

commodities ‘‘that has filed’’ the SAR, 

the guidance includes a statement 

clarifying that it is not permissible for 

an affiliate that has received such a SAR 

to share that SAR, or any information 

that would reveal the existence of that 

SAR with another affiliate, even if that 

affiliate is an affiliate subject to a SAR 

rule. The guidance also states that a 

broker-dealer in securities, mutual fund, 

futures commission merchant, and 

introducing broker in commodities, as 

part of its internal controls, should have 

written confidentiality agreements in 

place ensuring that its affiliates protect 

the confidentiality of the SAR through 

appropriate internal controls. Given the 

above restrictions, FinCEN is satisfied 

that the sharing permitted by this 

guidance is consistent with the BSA 

objective to ensure that suspicious 

activity reporting remains confidential. 

FinCEN has declined to permit 

sharing with affiliates that are not 

subject to a SAR rule, whether domestic 

or foreign.13 At this time, it is not 

apparent that such sharing would be 

consistent with the purposes of the 

BSA, to promote efforts to detect and 

report money laundering and terrorist 

financing by financial institutions that 

are subject to rules implementing the 

BSA, and to ensure the confidentiality 

of a SAR or any information that would 

reveal the existence of a SAR. 

Finally, this proposed guidance is 

intended only to remove unnecessary 

obstacles to detecting and reporting 

suspicious activity. It should not be read 

to impose new BSA requirements or to 

suggest that sharing with affiliates is 

compulsory. 

III. Request for Comment 

FinCEN invites comments on all 

aspects of the proposed guidance. 

FinCEN solicits comment on whether 

this proposed guidance would achieve 

the intended effect of promoting 

compliance with the BSA. We also 

request comment on whether the 

proposed guidance will be beneficial, 

whether it raises any ambiguities, and 

whether it will result in any negative 

consequences. In addition, we 

specifically invite comment on the 

following: 

• Whether the definition of ‘‘affiliate’’ 

is appropriate? 

• Whether the scope of the guidance 

should be expanded to permit sharing 

with other affiliates within the United 

States. Commenters suggesting that the 

scope of the guidance be expanded 

should address how additional sharing 

would be consistent with the purposes 

of Title II of the BSA; 

• Whether the scope of the guidance 

clearly limits sharing with affiliates to 

only those affiliates within the United 

States based on the application of 

FinCEN’s SAR rules or whether further 

clarification is needed to ensure that 

SARs are shared only in a domestic 

context; 

• Whether the scope of the guidance 

should be expanded to permit sharing 

with other affiliates outside of the 

United States. Commenters suggesting 

that the scope of the guidance be 

expanded should address how 

additional sharing outside the U.S. 

would be consistent with the purposes 

of Title II of the BSA. In particular, 

commenters should explain how a 

foreign affiliate might protect a SAR in 

light of a possible request for disclosure 

abroad that may be subject to foreign 

law; 

• Whether similar provisions to allow 

sharing with certain affiliates should be 

permitted among all financial 

institutions subject to a SAR rule; and 

• Whether financial institutions, 

other than depository institutions, 

securities broker-dealers, mutual funds, 

futures commission merchants, or 

introducing broker in commodities, 

subject to a SAR rule should be 

permitted to share a SAR, or any 

information that would reveal the 

existence of a SAR, with parent entities 

and/or affiliates; and 

Whether and how a securities brokerdealer, mutual fund, futures 

commission merchant, and introducing 

broker in commodities can store and 

provide access to SARs in an electronic 

system in a way that prevents the SARs 

from being subject to disclosure laws or 

obligations of foreign jurisdictions. 

Proposed Interpretive Guidance 14

Sharing Suspicious Activity Reports by 

Securities Broker-Dealers, Mutual 

Funds, Futures Commission Merchants, 

and Introducing Brokers in 

Commodities With Certain U.S. 

Affiliates 1

The Financial Crimes Enforcement 

Network (‘‘FinCEN’’), after consulting 

with staff of the U.S. Securities and 

Exchange Commission (‘‘SEC’’) and the 

Commodity Futures Trading 

Commission (‘‘CFTC’’), is issuing this 

guidance to confirm that under the Bank 

Secrecy Act (‘‘BSA’’) and its 

implementing regulations, securities 

broker-dealers, mutual funds, futures 

commission merchants, and introducing 

brokers in commodities that have filed 

a Suspicious Activity Report (‘‘SAR’’) 

may share the SAR, or any information 

that would reveal the existence of the 

SAR, with certain affiliates. This 

guidance does not address the 

applicability of any other Federal or 

state laws. 


pwalker on PROD1PC71 with PROPOSALS2
10164 Federal Register / Vol. 74, No. 44 / Monday, March 9, 2009 / Proposed Rules 

2See 31 U.S.C. 5318(g)(2). 

3See 31 CFR 103.15(d), 103.17(e), and 103.19(e). 

4See the Notice of Proposed Rulemaking 

published elsewhere in today’s Federal Register. 

5 ‘‘Guidance on Sharing of Suspicious Activity 

Reports by Securities Broker-Dealers, Futures 

Commission Merchants, and Introducing Brokers in 

Commodities’’ (January 20, 2006). 

6 ‘‘Frequently Asked Questions: Suspicious 

Activity Reporting Requirements for Mutual Funds’’ 

(October 4, 2006). 

7See supra note 4. 

8See 31 CFR 103.15 to 103.21. See also, 12 CFR 

21.11 (Office of the Comptroller of the Currency); 

12 CFR 208.62, 211.5(k), 211.24(f), 225.4(f) (Board 

of Governors of the Federal Reserve System); 12 

CFR 353.3 (Federal Deposit Insurance Corporation); 

12 CFR 563.180 (Office of Thrift Supervision); 12 

CFR 748.1(c) (National Credit Union 

Administration). 

The BSA prohibits the filer of a SAR 

from notifying any person involved in a 

suspicious transaction that the activity 

has been reported.2 Regulations issued 

by FinCEN 3 construe this 

confidentiality provision as generally 

prohibiting a securities broker-dealer, 

mutual fund, futures commission 

merchant, or introducing broker in 

commodities from disclosing a SAR, or 

any information that would reveal the 

existence of a SAR. 

However, the regulations make clear 

that, provided no person involved in the 

transaction is notified that the 

transaction has been reported, the 

prohibition does not include disclosures 

to (1) FinCEN; (2) any Federal, State, or 

local law enforcement agency; (3) any 

Federal or state regulatory agency that 

examines the securities broker-dealer, 

mutual fund, futures commission 

merchant, or introducing broker in 

commodities for compliance with the 

BSA; or (4) a self-regulatory 

organization for the purpose of 

examining the filing financial 

institution for compliance with its SAR 

reporting requirements. The regulations 

also provide that the prohibition does 

not apply to: (i) The disclosure of the 

underlying facts, transactions, and 

documents upon which a SAR is based, 

including, but not limited to, 

disclosures related to filing a joint SAR 

and in connection with certain 

employment references or termination 

notices; and (ii) the sharing of a SAR, or 

any information that would reveal the 

existence of a SAR, within the corporate 

organizational structure of a securities 

broker-dealer, mutual fund, futures 

commission merchant, or introducing 

broker in commodities for purposes 

consistent with Title II of the BSA, as 

determined by regulation or in 

guidance.4

In previously issued guidance 

(‘‘January 2006 Guidance’’), FinCEN, in 

consultation with the staffs of the SEC 

and the CFTC, determined that a 

securities broker-dealer, futures 

commission merchant, or introducing 

broker in commodities may share a SAR 

with its parent entity (whether domestic 

or foreign).5 In October 2006, FinCEN 

additionally published guidance stating 

that a mutual fund may share SARs with 

an investment adviser that controls the 

fund, whether domestic or foreign.6

These guidance documents continue to 

be applicable and comport with the SAR 

regulations referenced above.7 The 

sharing of a SAR or, more broadly, any 

information that would reveal the 

existence of a SAR, with a parent entity 

or investment adviser that controls a 

mutual fund (including a foreign parent 

entity or foreign investment adviser) 

promotes compliance with the 

applicable requirements of the BSA by 

enabling the parent entity or investment 

adviser that controls a mutual fund to 

discharge its oversight responsibilities 

with respect to enterprise-wide risk 

management and compliance with 

applicable laws and regulations. 

The January 2006 Guidance deferred 

taking a position on whether a securities 

broker-dealer, futures commission 

merchant, or introducing broker in 

commodities is permitted to share a 

SAR with affiliates and directed 

institutions not to share with such 

affiliates. FinCEN, in consultation with 

SEC and CFTC staff, has now concluded 

that a securities broker-dealer, mutual 

fund, futures commission merchant, or 

introducing broker in commodities that 

has filed a SAR may share the SAR, or 

any information that would reveal the 

existence of the SAR, with an affiliate, 

provided the affiliate is subject to a SAR 

regulation 8 issued by FinCEN, the 

Board of Governors of the Federal 

Reserve System, the Federal Deposit 

Insurance Corporation, the National 

Credit Union Administration, the Office 

of the Comptroller of the Currency, or 

the Office of Thrift Supervision. The 

sharing of SARs with such affiliates 

facilitates their compliance with the 

identification of suspicious transactions 

taking place through the securities 

broker-dealer’s, mutual fund’s, futures 

commission merchant’s, or introducing 

broker in commodities’ affiliates that are 

subject to a SAR rule. Therefore, such 

sharing within the corporate 

organizational structure of a securities 

broker-dealer, mutual fund, futures 

commission merchant, or introducing 

broker in commodities is consistent 

with the purposes of Title II of the BSA. 

It is not consistent with the purposes 

of Title II of the BSA for an affiliate that 

has received a SAR from a securities 

broker-dealer, mutual fund, futures 

commission merchant, or introducing 

broker in commodities to share that 

SAR, or any information that would 

reveal the existence of that SAR with an 

affiliate of its own, even if that affiliate 

is subject to a SAR rule. 

As is the case with sharing SARs with 

parent entities, there may be 

circumstances under which a securities 

broker-dealer, mutual fund, futures 

commission merchant, or introducing 

broker in commodities, its affiliate, or 

both entities would be liable for direct 

or indirect disclosure by the affiliate of 

a SAR or any information that would 

reveal the existence of a SAR. Therefore, 

the securities broker-dealer, mutual 

fund, futures commission merchant, or 

introducing broker in commodities, as 

part of its internal controls, should have 

written confidentiality agreements in 

place ensuring that its affiliates protect 

the confidentiality of the SAR through 

appropriate internal controls. 

Consistent with the BSA and the 

implementing regulations issued by 

FinCEN, a SAR, or any information that 

would reveal the existence of a SAR, 

must not be disclosed, even under this 

guidance, if the securities broker-dealer, 

mutual fund, futures commission 

merchant, or introducing broker in 

commodities has reason to believe it 

may be disclosed to any person 

involved in the suspicious activity that 

is the subject of the SAR. 

Dated: February 27, 2009. 

James H. Freis, Jr., 

Director, Financial Crimes Enforcement 

Network. 

[FR Doc. E9–4695 Filed 3–6–09; 8:45 am] 

BILLING CODE 4810–02–P 


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