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Federal Register / Vol. 86, No. 13 / Friday, January 22, 2021 / Proposed Rules would amend those sections to allow the OCC to issue exemptions from the regulations SAR requirements.

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II. Background The OCC has long required its regulated institutions to report potential violations of law arising from transactions that flow through those institutions.1 The OCC required such reporting because fraud, abusive insider transactions, check-kiting schemes, money laundering, and other financial crimes can pose serious threats to a financial institutions continued viability and, if unchecked, can undermine the public confidence in the nations financial system generally.2
In 1992 Congress passed the Annunzio-Wylie Anti-Money Laundering Act, which redesigned the criminal referral process applicable to OCC supervised entities and made the reporting of certain suspicious transactions a requirement of the Bank Secrecy Act BSA.3 The Act permitted the Department of the Treasury to require financial institutions, including national banks and federal savings associations, to report any suspicious transaction relevant to a possible violation of law or regulation. 4 As a result, the Department of the Treasury, in consultation with the OCC, the other federal banking agencies, and law enforcement, developed the modern SAR form and reporting process, which standardized the reporting forms and created a centralized database that could be accessed by multiple law enforcement and regulatory agencies.
To implement this new reporting system, the Financial Crimes Enforcement Network of the Department of the Treasury FinCEN issued its implementing SAR regulations in 1996
for financial institutions subject to the 1 The OCC first codified this requirement in 1971
at 12 CFR 7.5225, which required national banks to submit a report to the OCC, the FBI, the U.S.
attorney for the banks district, and the banks bonding company consisting of any state of facts growing out of the affairs of the bank known or suspected to involve criminal violation of any other section of the United States Code. 36 FR 17000, 17012 Aug. 26, 1971. In 1986, the OCC repealed 12 CFR 7.5225 and adopted its criminal referral form regulation, 12 CFR 21.11, which required national banks to report specified suspicious transactions on a standardized criminal referral form. 51 FR 25866 July 17, 1986. As explained below, the OCC revised 12 CFR 21.11 in the 1990s to conform to the new SAR reporting form and system.
2 54 FR 25839 June 20, 1989.
3 Public Law 102550, 106 Stat. 3672 1992.
4 31 U.S.C. 5318g1. The quoted text is from section 1517 of the Annunzio-Wylie Anti-Money Laundering Act, which was originally codified at 31
U.S.C. 5314g. The text was moved as part of the Violent Crime Control and Law Enforcement Act of 1994.

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requirements of the BSA to, among other things, specifically address the reporting of money laundering transactions and transactions designed to evade the reporting requirements of the BSA.5 To further implement this new reporting process and reduce unnecessary reporting burdens, the OCC
and the other federal banking agencies contemporaneously amended their criminal referral form regulations to incorporate the new SAR form and reporting database, align their regulatory reporting requirements with FinCENs BSA reporting requirements, and further refine the reporting processes.6
As a result of this redesign and FinCENs implementing regulations, national banks and federal savings associations are currently required to file SARs under both OCC and FinCEN
regulations. These regulations are not identical but are substantially similar with regard to the specified BSA
reporting obligations required by FinCEN. Both the OCCs and FinCENs SAR regulations require banks to file SARs relating to money laundering, transactions that are designed to evade the reporting requirements of the BSA, and transactions that have no business or apparent lawful purpose or are not the sort in which the particular customer would normally be expected to engage, and the bank knows of no reasonable explanation for the transactions after examining the available facts, including the background and possible purpose of the transactions.7 Furthermore, with respect to the SAR confidentiality requirements in the BSA, both the OCCs and FinCENs SAR regulations require banks to maintain the confidentiality of a SAR
and any information that would reveal the existence of the SAR, outside of certain circumstances.
While the OCC and FinCEN
regulations contain substantively similar requirements, including requiring reporting in certain common contexts and requiring institutions to maintain the confidentiality of SARs, the OCC and the other federal banking agencies require reporting in broader 5 61 FR 4326 Feb. 5, 1996. Prior to the adoption of FinCENs SAR regulation in 1996 and the accompanying revisions to the OCCs regulation, the OCCs criminal referral regulation did not have a specific provision that required the reporting of money laundering transactions. However, the criminal referral regulation broadly encompassed money laundering and structuring transactions as explained in the Supplementary Information section to the final rule enhancing the criminal referral process. 54 FR 25839, 25840 June 20, 1989.
6 61 FR 4332 Feb. 5, 1996 OCC.
7 See 12 CFR 21.11c4; 163.180d3iv; 31
CFR 1020.320a2.

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circumstances e.g., insider abuse at any dollar amount.8 As previously noted, these violations and abuse situations can pose serious threats to financial institutions continued viability and, if unchecked, can undermine the public confidence in the nations financial industry.
The OCC and FinCEN SAR
regulations also provide: i That SARs are not required for a robbery or burglary committed or attempted that is reported to appropriate law enforcement authorities; ii that SARs are confidential and shall not be disclosed except as authorized; iii recordkeeping requirements for SARs and supporting documentation; iv that supporting documentation shall be deemed to have been filed with the SAR; and v that supporting documentation shall be made available to appropriate law enforcement agencies upon request. The regulations also provide a limitation on liability to any national bank, federal savings association or other financial institution and any director, officer, employee, or agent of a national bank or federal savings association or other financial institution that makes a voluntary disclosure of any possible violation of law or regulation to a government agency or files a SAR
pursuant to the regulations or any other authority. The OCCs regulations also contain a provision requiring that national banks and federal savings associations promptly notify their board of directors when a SAR has been filed.
While neither the OCCs SAR
regulations nor FinCENs SAR reporting regulation contain provisions permitting exemptions, FinCEN has general authority to grant exemptions from the requirements of the BSA, which includes granting exemptions under its SAR reporting regulations.9 FinCENs regulation provides that the Secretary of Treasury, in his sole discretion, may by written order or authorization make exceptions to or grant exemptions from the requirements of the BSA. Such exceptions or exemptions may be conditional or unconditional, may apply to particular persons or to classes of persons, and may apply to transactions or classes of transactions. 10 The Secretary has delegated this exemption authority to FinCEN.
This disparity in exemption authority makes it more difficult for the OCC to grant relief if a national bank or federal 8 12 CFR 208.62 Board of Governors of the Federal Reserve; 12 CFR 390.353 Federal Deposit Insurance Corporation; 12 CFR 748.1 National Credit Union Administration.
9 See 31 U.S.C. 5318a7, with implementing regulations at 31 CFR 1010.970.
10 31 CFR 1010.970a.

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