OCC Confidentiality of SARS comment letter 2

Carla.Taylor

Description

June 8, 2009 Office of the Comptroller of the Currency 250 E Street, SW Washington DC 20219 Attention: Docket Number OCC-2009-0004 Re: Confidentiality of Suspicious Activity Reports Dear Sir or Madam: 1The Independent Community Bankers of America (ICBA) welcomes the opportunity to comment on the Comptroller of the Currency’s (OCC’s) notice of proposed rulemaking on clarifying the confidentiality requirements of a report of a suspicious transaction. The Bank Secrecy Act (BSA) and its implementing regulations require financial institutions, including national banks, to file a Suspicious Activity Report (SAR) when a known or suspected violation of Federal law or a suspicious activity related to money laundering, terrorist financing or other criminal activity is detected. The BSA prohibits notifying any person involved in a suspicious transaction that the transaction was reported. Regulations by the Federal bank regulatory agencies and the Financial Crimes Enforcement Network (FinCEN) implemented the prohibition on SAR disclosure and generally no information about or contained in a SAR may be disclosed. The OCC is proposing amendments to these rules to clarify the standards governing SAR disclosure. The rules prohibiting the disclosure of SARs are unclear and vague, generating numerous questions regarding information that is subject to the prohibition. Accordingly, the OCC is proposing to amend its ...

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• Publié par: Masang
• Nombre de lectures: 31
• Langue: English

Extrait

June 8, 2009

Office of the Comptroller of the Currency

250 E Street, SW

Washington DC 20219

Attention:

Docket Number OCC-2009-0004

Re:

Confidentiality of Suspicious Activity Reports

Dear Sir or Madam:

The Independent Community Bankers of America

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(ICBA) welcomes the

opportunity to comment on the Comptroller of the Currency’s (OCC’s) notice of

proposed rulemaking on clarifying the confidentiality requirements of a report of a

suspicious transaction.

The Bank Secrecy Act (BSA) and its implementing regulations require financial

institutions, including national banks, to file a Suspicious Activity Report (SAR)

when a known or suspected violation of Federal law or a suspicious activity

related to money laundering, terrorist financing or other criminal activity is

detected.

The BSA prohibits notifying any person involved in a suspicious

transaction that the transaction was reported.

Regulations by the Federal bank

regulatory agencies and the Financial Crimes Enforcement Network (FinCEN)

implemented the prohibition on SAR disclosure and generally no information

about or contained in a SAR may be disclosed.

The OCC is proposing

amendments to these rules to clarify the standards governing SAR disclosure.

The rules prohibiting the disclosure of SARs are unclear and vague, generating

numerous questions regarding information that is subject to the prohibition.

Accordingly, the OCC is proposing to amend its rules to indicate that SAR

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The Independent Community Bankers of America represents nearly 5,000 community banks of all sizes and charter types throughout the

United States and is dedicated exclusively to representing the interests of the community banking industry and the communities and

customers we serve. ICBA aggregates the power of its members to provide a voice for community banking interests in Washington,

resources to enhance community bank education and marketability, and profitability options to help community banks compete in an

everchanging marketplace.

With nearly 5,000 members, representing more than 20,000 locations nationwide and employing nearly

300,000 Americans, ICBA members hold $1 trillion in assets, $800 billion in deposits, and $700 billion in

loans to consumers, small businesses and the agricultural community. For more information, visit ICBA’s

Website at www.icba.org.

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information may not be disclosed, except as authorized in the narrow

circumstances identified.

ICBA believes expressly stating the specific conditions

under which a SAR can be disclosed provides additional guidance to community

banks and removes the uncertainty regarding the circumstances under which

SAR information can be shared.

Furthermore, the OCC is proposing that in addition to the confidentiality of the

SAR form itself, confidential treatment must also be afforded to “any information

that would reveal the existence of a SAR.”

We agree that this additional

language would strengthen the confidential nature of a SAR, which is important

to community banks which value the safeguarding of sensitive information.

If a

bank believes the existence of a SAR could be revealed for purposes other than

for law enforcement, it may be reluctant to candidly report suspicious

transactions with the level of detail that is helpful in potential investigations.

Additionally, the disclosure of a SAR could inadvertently result in notification to

an individual involved in the reported transaction and may risk a community

bank’s relationship with its customer.

The bank would be placed in a precarious

position of defending the SAR filing without disclosing its existence.

For these

reasons, we believe information revealing the existence of a SAR should be

afforded the same protection from disclosure as the SAR form itself.

Moreover, it is important to clarify that while information revealing the existence

of a SAR is confidential, documents and transactions created in the ordinary

course of business that give rise to the reporting may be disclosed in certain

circumstances.

Therefore, we appreciate that the proposed rules expressly state

that underlying facts, transactions, and documents upon which a SAR is based

may be disclosed to another financial institution for the preparation of a joint SAR

or in connection with certain employment references or termination notices.

The OCC is also proposing to include BSA statutory language in its rules that

specifically subjects directors, officers, employees, and agents of a national bank

to the confidentiality requirements.

While we support incorporating the statutory

language in the rules, we believe a bank should be protected from liability if its

agent inadvertently discloses SAR information, provided the bank has

appropriate internal controls and safeguards in place to ensure that its agent

protects the confidentiality of a SAR.

Financial institutions have a long history of working with third-parties or agents to

perform essential bank functions.

They already are subject to comprehensive

Gramm-Leach-Bliley Act

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(GLB Act) privacy and data security responsibilities,

which require policies and procedures to protect the security and integrity of

confidential information.

Additionally, before a bank shares sensitive information

with a service provider, it must enter into a contract with the third party that

requires it to maintain the confidentiality of the information and generally prohibits

the third party from disclosing or using the information other than to carry out the

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15 U.S.C. 6801 (1999)

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purposes for which the information was disclosed.

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As such, the bank has a

responsibility to have appropriate controls in place when sharing sensitive

information.

We suggest the OCC provide that a national bank that is subject to

the GLB Act shall be protected from liability for any inadvertent disclosure of SAR

information by its agent.

A national bank that is subpoenaed or otherwise requested to disclose SAR

information must decline to provide the information and must notify the OCC of

the request.

The proposed rulemaking would require a national bank to also

submit to OCC its response to the request, and provide the same information to

the Financial Crimes Enforcement Network (FinCEN).

ICBA believes this

provision is redundant and not necessary to comply with the standards governing

SAR disclosure.

The additional notification requirement was added so that either

or both the OCC and FinCEN can intervene, if necessary, to prevent the

disclosure of SAR information by a bank.

Informing only the OCC should be

sufficient notification and provide adequate information for the agency to contact

FinCEN directly to determine whether intervention is needed.

The proposed rules make clear that a national bank may share SAR information

within its corporate organizational structure for purposes consistent with the BSA.

FinCEN issued additional guidance that further elaborates on sharing of SAR

information within a corporate organization, to which ICBA is submitting

comments in a separate letter to FinCEN.

ICBA appreciates the opportunity to offer comments in connection with OCC’s

notice of proposed rulemaking on clarifying the scope of the statutory prohibition

on the disclosure of a report of a suspicious transaction.

If you have any

questions about our letter or need additional information, please do not hesitate

to contact me at 202-659-8111 or by email at [e-mail].

Sincerely,

/s/

Lilly Thomas

Regulatory Counsel

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12 C.F.R.§ 40.13