FinCEN Seeks to Strengthen Public-Private Partnership to Combat Financial Crime
WASHINGTON — The United States Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) launched the FinCEN Exchange program today to enhance information sharing with financial institutions. As part of this program, FinCEN, in close coordination with law enforcement, will convene regular briefings with financial institutions to exchange information on priority illicit finance threats, including targeted information and broader typologies. This will enable financial institutions to better identify risks and focus on high priority issues, and will help FinCEN and law enforcement receive critical information in support of their efforts to disrupt money laundering and other financial crimes.
“Strong public-private partnerships and two-way information sharing is a crucial component of our efforts to combat the sophisticated money laundering methods and evolving threats we face today,” said Sigal P. Mandelker, Treasury Under Secretary for Terrorism and Financial Intelligence. “FinCEN Exchange will bring together law enforcement, FinCEN, and different types of financial institutions from across the country to share information that can help identify vulnerabilities and disrupt terrorist financing, proliferation financing and other financial crimes.”
Private sector participation in FinCEN Exchange is strictly voluntary, and the program does not introduce any new regulatory requirements. It also does not replace or otherwise affect existing mechanisms by which law enforcement engages directly with the financial industry. It is part of Treasury’s broader objective of strengthening the anti-money laundering framework by encouraging, enabling, and acknowledging more regular industry focus on high-value and high-impact activities. Operational briefings under the FinCEN Exchange program will begin in the coming weeks.
[UPDATED 12/5/17 — View Under Secretary Sigal P. Mandelker’s Full Speech Announcing FinCEN Exchange at the ABA/ABA Financial Crimes Enforcement Conference on December 4, 2017]
Introducing the FinCEN Exchange
“We have heard from you how valuable this type of information is. From my discussions both in the United States and around the world, it is clear that our outreach helps you better prioritize targets and utilize your resources. We have also heard from many quarters that you want more outreach, discussion, and information.
We hear you loud and clear. To that end, today I am announcing an initiative called FinCEN Exchange, a new public-private information sharing program that FinCEN will lead.
FinCEN Exchange will bring financial institutions, FinCEN, and law enforcement together to facilitate greater information sharing between the public and private sectors.
Information sharing should be a two-way street. It significantly contributes to our ability to combat the increasingly sophisticated money laundering methods we face.
As part of FinCEN Exchange, we will convene regular briefings – approximately once every 6-8 weeks – with law enforcement, FinCEN, and financial institutions to exchange targeted information on priority illicit finance threats. In close coordination with law enforcement, the goal is to provide information to support specific matters through Section 314(a) of the USA PATRIOT Act and other authorities, and also to provide financial institutions with broader typologies to help you identify illicit activity. This will help you better identify risks within your enterprise, and help FinCEN and law enforcement receive critical information in support of their efforts to disrupt money laundering and other financial crimes.
We have been piloting this effort over the last few years and believe that it is time to institutionalize this program within our AML framework. Since 2015, FinCEN has convened over a dozen such briefings with various law enforcement agencies across the country with more than 40 financial institutions.
At these briefings, we have typically worked with law enforcement to issue Section 314(a) requests related to specific matters and have also provided the financial typologies associated with those matters. I can tell you firsthand that I have seen the benefits of this public-private partnership. Information provided after the briefings by financial institutions through Suspicious Activity Reports (SARs) have helped us map out and target weapons proliferators, sophisticated global money laundering operations, human trafficking and smuggling rings, and corruption and trade-based money laundering networks, among others.
Participants in these briefings have provided us with overwhelmingly positive feedback. They find the information invaluable in channeling their resources towards high-priority targets and appreciate our willingness to work closely to combat these threats.
We will take typologies learned from these engagements and share them with the broader financial community to assist others in identifying and reporting similar activity. And we will continue working with international partners to strengthen public-private information sharing at home and around the world. FinCEN Exchange will be a core part of our effort to strengthen public-private partnerships to combat financial crime.
Participation is voluntary, of course, but I think our AML system is so much stronger when we work together. And let me be absolutely clear – this program is not intended to add a regulatory burden on your financial institutions. We are not imposing any new requirements. To the contrary, we think this type of information sharing will strengthen your compliance programs by enhancing your ability Participation is voluntary, of course, but I think our AML system is so much stronger when we work together. And let me be absolutely clear – this program is not intended to add a regulatory burden on your financial institutions. We are not imposing any new requirements. To the contrary, we think this type of information sharing will strengthen your compliance programs by enhancing your ability to focus on high priority issues. After all, a key part of our goal in improving the AML framework is to ensure that your resources are devoted to high-value, high-impact activities. It also does not replace or otherwise affect in any way existing mechanisms for law enforcement to engage on its own with the private sector.
Additional Lines of Effort
Our enhanced focus on public-private partnership is just one element in our effort to combat financial crime and root illicit actors out of our financial system.
Improving information sharing is not limited to the exchange of information between the public and private sectors. We welcome efforts by financial institutions to share information with each other.
We know that some banks have started forming consortia to share information more dynamically under Section 314(b) of the USA PATRIOT Act. I have seen the valuable results this information sharing can produce. Money launderers are sophisticated. They don’t limit their activity to just one institution. By working together, these groups of financial institutions have provided substantial insight into illicit finance threats that otherwise may be invisible to a single institution. We are highly encouraged by the private sector’s willingness to engage in this type of exchange and we appreciate the amount of time and effort that is going into these projects.
We are also open to innovative ideas from the private sector as to how we can strategically promote such information sharing within industry.
We are likewise encouraged by other innovations we are seeing in financial institutions to combat financial crime. In recent years, financial institutions have improved their ability to identify customers and monitor transactions using new technologies that rely on artificial intelligence and machine learning.
To that end, we are actively engaged with financial institutions and businesses in the FinTech and RegTech sectors as we explore ways to work more closely with financial institutions, in particular to foster innovation and leverage financial and regulatory technology.
We are committed to a long-term and collaborative approach to combat financial crime and root out illicit actors. These efforts are so much more effective when we work as partners.
Our joint efforts to combat financial crime have come a long way since the 1970s. The financial community truly is on the financial front lines, and we could not accomplish our objectives without your hard work, diligence, and cooperation. At Treasury, we are committed to partnering even more closely with you through programs like FinCEN Exchange to protect our financial system and, most importantly, our country. We look forward to working with all of you in this important mission and I look forward to learning from you as I engage with our incredible team at Treasury on our path forward.”
Felix Shipkevich is a principal of Shipkevich PLLC. His practice focuses on providing counsel to FinTech and financial services firms, including financial technology, payments and emerging digital currency space. He has spoken at national panels in the money transmitter space and payments industry. Mr. Shipkevich’s payments practice has brought him into contact with money transmitter registration requirements in all fifty U.S. States.
To read his full profile, click here.