FinCEN Issues Statement to Financial Institutions on BSA/AML Compliance During COVID-19 Pandemic

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The Financial Crimes Enforcement Network (FinCEN) released a statement to financial institutions on March 16, 2020, concerning the COVID-19 pandemic. The statement covered two main topics:

  1. Potential delays by financial institutions in filing required Bank Secrecy Act (BSA) reports
  2. Remaining alert to identify malicious or fraudulent transactions, which often arise during natural disasters

First, FinCEN addressed COVID-19-affected financial institutions that have concern over potential delays in their ability to file required BSA reports. It encourages these institutions to contact both FinCEN and their functional regulator “as soon as practicable” and keep them apprised as circumstances change. The statement directs financial institutions seeking to contact FinCEN to “call FinCEN’s Regulatory Support Section (RSS) at 1-800-949-2732 and select option 6 or e-mail at FRC@fincen.gov.”

Second, FinCEN advised institutions to remain vigilant regarding potential financial fraud, which has arisen in the wake of past natural disasters. It specified the following emerging trends on this front:

  1. Imposter scams, where bad actors impersonate government agencies, international organizations or healthcare organizations to solicit donations, steal personal information and distribute malware.
  2. Investment scams, where opportunistic individuals or companies falsely claim that publicly traded companies’ products or services “can prevent, detect, or cure coronavirus.” See SEC Notice on COVID-19-related investment scams.
  3. Product scams, where companies sell purported health products that are unapproved or unbranded and make claims as to their effect on the coronavirus.
  4. Insider trading related to the COVID-19 pandemic.

FinCEN also directed financial institutions to its prior advisory regarding disaster-related fraud, which discusses other relevant fraud types, including benefits fraud, charities fraud and cyber-related fraud.

Where suspicious transactions involve COVID-19, FinCEN advised individuals preparing suspicious activity reports (SARs) not only to identify the appropriate suspicious activity typologies, but also to enter “COVID19” in Field 2 of the SAR template.

FinCEN did not commit to extending any reporting deadlines. As a result, financial institutions should remain vigilant during this challenging time and develop methods to continue investigating fraud and related alerts in accordance with regulations and company policy. And if any COVID-19-related delays arise, contact FinCEN and functional regulators as soon as possible. A simple call or email now may avoid MRAs, penalties and other regulatory pitfalls later.

For details, see the full text of FinCEN’s release, available online.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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