Regulatory Efficiency and Effectiveness - 2011

January 2011

FinCEN began the year by releasing its third quarter 2010 mortgage fraud report, Mortgage Loan Fraud SAR Filings. The report shows that SARs characterized by filers as indicating possible mortgage loan fraud (MLF) increased 2 percent to 16,693 in the third quarter of 2010, up from 16,339 MLF SARs in the 2009 third quarter. The report also shows that the total number of SARs for all categories filed during the quarter increased 2 percent to 175,717, up from 172,125 filed in the 2009 third quarter. In all, 9 percent of all SARs filed in the 2010 third quarter indicated MLF as an activity characterization, the same percentage reported in the third quarter of 2009.

February 2011

Director Freis reiterated his commitment to efficiency and effectiveness during remarks to the American Bankers Association's National Conference for Community Bankers. He summarized FinCEN's outreach meetings with depository institutions with less than $5 billion in assets, and announced the release of FinCEN's corresponding outreach report as well as an advisory on financial exploitation of the elderly.

  • News release on Outreach Report to Depository Institutions with Assets under $5 Billion

March 2011

In direct support of its commitment to make regulations more intuitive as part of its Regulatory Efficiency and Effectiveness Initiative, FinCEN’s rules and regulations have been reorganized within a new Chapter X of Title 31 of the Code of Federal Regulations (CFR). FinCEN’s rules have been renumbered into a new tenth chapter of Title 31 which appears as “Title 31 Chapter X - Financial Crimes Enforcement Network.” FinCEN has not made any substantive changes to the Bank Secrecy Act (BSA) rules. As noted in the final rulepublished in the Federal Register on October 26, 2010, the reorganization streamlines the BSA regulations into general and industry-specific Parts, making the regulatory obligations clearer in their structure and more accessible to affected financial institutions. Chapter X helps a financial institution identify its obligations under the BSA in a more organized and understandable manner. Prior to March 1, 2011, FinCEN’s regulations were included in the CFR as Part 103 in Chapter I under “Title 31, Money and Finance: Treasury.” FinCEN has also incorporated the appropriate Chapter X citations within the BSA forms and provided supporting documentation outlining the citation updates. The updated citations within the forms do not create any new filing obligations. FinCEN has made available on its Web site a variety of supporting information, frequently asked questions, and tools to facilitate institutions’ transition from the former structure to Chapter X.

  • News release announcing reorganization and renumbering of FinCEN’s regulations

Supporting its commitment to provide feedback and trend analyses, FinCEN released an analysis of suspicious activity reports (SARs) on possible fraud in commercial real estate financing. The analysis found that reported incidences of suspicious activity in commercial real estate financing as reported by depository institutions filing SARs almost tripled between 2007 and 2010. In addition, FinCEN released an advisory to assist financial institution efforts to help law enforcement target this type of fraudulent activity. The advisory provided some examples of commercial real estate fraud (CREF) schemes and suggested financial institutions use the term "CREF" when completing SAR narratives involving potential commercial real estate fraud.

April 2011

FinCEN provided additional feedback to the filing community by issuing an advisory on identifying narcotics and bulk currency corridors. The goal was to assist financial institutions in better understanding their respective geographic locations, with respect to established flows of narcotics and bulk currency, and how their location may affect their Bank Secrecy Act obligations.

  • Advisory on narcotics and bulk currency corridors

May 2011

FinCEN's focus on providing feedback continued with the release of the latest issues of the SAR Activity Review - Trends, Tips & Issuesand the SAR Activity Review - By the Numbers. Trends, Tips & Issues contained illuminating law enforcement case examples that involved corruption. FinCEN also updated its archive of law enforcement cases to include these additional examples of investigations supported by Bank Secrecy Act filings.

June 2011

As noted in its initial regulatory efficiency and effectiveness initiative, FinCEN seeks to provide quality feedback to industry and law enforcement. In June, FinCEN issued its first quarter 2011 mortgage loan fraud (MLF) analysis. The report stated that the number of MLF suspicious activity reports (SARs) rose 31 percent from the first quarter of 2010, mainly attributable to activities that occurred more than two years prior to the filing of the SARs. SARs referencing more recent activity continued to highlight attempted fraud in connection with loan modifications and short sales.

  • News release on FinCEN’s report on first quarter 2011 SAR filings involving mortgage loan fraud

July 2011

In direct support of its commitment to craft a more narrow definition of a money services business (MSB), FinCEN released a final rule that more clearly defined which businesses qualify as MSBs and are therefore subject to anti-money laundering rules under the BSA. A little more than a week later, FinCEN issued a final rule that amended the BSA regulations relating to prepaid access, which amended the MSB rules and established a more comprehensive regulatory approach for prepaid access. The rule put in place suspicious activity reporting, and customer and transactional information collection requirements on providers and sellers of certain types of prepaid access similar to other categories of MSBs.

  • News releases on final rules regarding the definition of an MSB and prepaid access