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Federal Register / Vol. 86, No. 13 / Friday, January 22, 2021 / Proposed Rules
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prompt notification to the institutions board of directors when a SAR has been filed.
FinCEN has general authority to grant exemptions from the BSAs requirements, which includes granting exemptions under its SAR reporting regulation.8 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. The Secretary of Treasury delegated this exemption authority to FinCEN. In contrast, the FDICs SAR regulations contain a discrete set of filing exemptions pertaining to physical crimes robberies and burglaries, and lost, missing, counterfeit, or stolen securities.
This disparity in exemptions makes it more difficult for the FDIC to grant relief if an FDIC-supervised institution has a novel SAR filing proposal that does not squarely fit within the FDICs regulatory requirements, but would nonetheless be consistent with safe and sound banking and with the BSA. As financial technology and innovation continue to develop in the area of monitoring and reporting financial crime and terrorist financing, the FDIC will need the express regulatory flexibility to grant exemptive relief when appropriate in this area.
Moreover, in 2018, the FDIC, the Board of Governors of the Federal Reserve System, the National Credit Union Administration, the Office of the Comptroller of the Currency, and FinCEN issued a statement encouraging banks to take innovative approaches to meet their BSA/Anti-Money Laundering compliance obligations.9 The statement explained that banks 10 are encouraged to consider, evaluate, and where appropriate, responsibly implement innovative approaches in this area.
Today, innovative approaches and technological developments in the areas of SAR monitoring, investigation, and filing may involve, among other things:
i Automated form population using natural language processing, transaction 8 See 31 U.S.C. 5318a7, with implementing regulations at 31 CFR 1010.970.
9 See https www.fdic.gov/news/news/press/
2018/pr18091a.pdf.
10 Under the Bank Secrecy Act, the term bank is defined in 31 CFR 1010.100d and includes each agent, agency, branch, or office within the United States of banks, savings associations, credit unions, and foreign banks.

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data, and customer due diligence information; ii automated or limited investigation processes depending on the complexity and risk of a particular transaction and appropriate safeguards;
and iii enhanced monitoring processes using more and better data, optical scanning, artificial intelligence, or machine learning capabilities. Requests for exemptive relief pertaining to innovation or other matters may involve, among other things, expanded investigations and SAR timing issues, SAR disclosures and sharing, continued SAR filings for ongoing activity, SAR
outsourcing of responsibilities and practices, the role of agents of FDICsupervised institutions, the use of shared utilities and shared data, and the use and sharing of de-identified data commonly referred to as anonymized data. The FDIC expects that new technologies will continue to prompt additional innovative approaches related to suspicious activity monitoring and SAR filing.
If the FDIC adopts the proposed rule and uses it to grant exemptions, the exemptions would not relieve FDICsupervised institutions from the obligation to comply with FinCENs SAR regulation when applicable. To the extent an exemption request from an FDIC-supervised institution involves both the FDICs SAR regulation and FinCENs SAR regulation, the FDICsupervised institution would need an exemption from both the FDIC and FinCEN. The FDIC expects to coordinate with FinCEN when handling parallel exemptions. As explained above, however, the FDICs SAR regulation imposes additional requirements not included in FinCENs SAR regulation.
To the extent an exemption request is subject to a requirement imposed by the FDICs SAR regulation alone and not a parallel FinCEN requirement, the proposed rule would allow the FDIC to exempt a supervised institution from that requirement.
III. Proposed Regulation Changes The proposed rule would add three paragraphs to 12 CFR 353.3d of the FDIC Rules and Regulations that would permit the FDIC to exempt a supervised institution from the requirements, in full or in part, of 12 CFR 353.3. Under the proposed rule, the FDIC in evaluating an exemption request would determine whether the request is consistent with safe and sound banking, and may consider other appropriate factors. The FDIC would also seek FinCENs determination whether the exemption request is consistent with the purposes of the BSA, as applicable, where an exemption request involves
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the filing of a SAR for potential money laundering, violations of the BSA, or other unusual activity covered by FinCENs SAR regulation. When a request involves the SAR filing requirements of both FinCEN and the FDIC, the proposed rule would require the FDIC to seek FinCENs concurrence.
In addition, the proposed rule provides that the FDIC may grant an exemption for a specified time period. The supervised institution would then be able to rely on the exemption for a period of time as determined and communicated by the FDIC. Under the proposed rule, the FDIC could also extend or revoke previously granted exemptions if circumstances change related to the factors set out above consistent with the BSA and safety and soundness, or any imposed conditions.
A. Part 353.3d Exemptions Section 353.3d sets forth exemptions from the FDICs SAR regulation.
Currently, Section 353.3d1 exempts FDIC-supervised institutions from filing a SAR for a committed or attempted robbery or burglary that is reported to the appropriate law enforcement authorities. Section 353.3d2 exempts an FDIC-supervised institution from filing a SAR for lost, missing, counterfeit, or stolen securities if the institution files a report pursuant to the reporting requirements of 17 CFR
240.17f1. The proposed rule would add three paragraphs to 353.3d.
B. Part 353.3d3
The proposed paragraph d3 would permit the FDIC to exempt any FDICsupervised institution from the requirements of 12 CFR 353.3. Upon receiving a written request from an FDIC-supervised institution, the FDIC
would determine whether the exemption is consistent with safe and sound banking. The FDIC would also seek FinCENs determination whether the exemption is consistent with the purposes of the BSA, as applicable, where an exemption request also requires an exemption from FinCENs SAR regulation. The 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.
The proposed paragraph d3 would require the FDIC to seek FinCENs concurrence regarding an exemption request that also requires an exemption from FinCENs SAR regulation. The proposed paragraph d3 would permit the FDIC to consult with FinCEN
regarding other exemption requests. The FDIC may also consult with the other
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