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Federal Register / Vol. 86, No. 13 / Friday, January 22, 2021 / Proposed Rules state and federal banking agencies before granting any exemption.
C. Part 353.3d4
The proposed paragraph d4 would require that, after the FDIC has received FinCENs concurrence and consulted with appropriate agencies, the FDIC
provide a written response to the FDICsupervised institution that submitted the exemption request. An FDICsupervised institution that has received an exemption under paragraph d3
may rely on the exemption for a period of time to be communicated by the FDIC
in its granting of the exemption, which may be indefinite.
D. Part 353.3d5
The proposed paragraph d5 would permit the FDIC to revoke or extend the period of time for an exemption granted under paragraph d3. Under the proposed paragraph d5, the FDIC
would have discretion to revoke exemptions. The proposed paragraph d5 would require the FDIC to provide written notice to the FDIC-supervised institution of the FDICs intention to revoke an exemption. The proposed paragraph d5 would require the written notice to include the basis for the revocation and provide the FDICsupervised institution an opportunity to respond. The proposed paragraph d5
would require the FDIC to consider the institutions response before deciding to revoke an exemption. The proposed paragraph d5 would require the FDIC
to notify, in writing, the FDICsupervised institution of the FDICs final decision to revoke an exemption.
IV. Summary If the proposal is finalized, 12 CFR
353.3d would be amended to add paragraphs d3 through 5, and would apply to all FDIC-supervised institutions. These initiatives would permit the FDIC to grant SAR
exemptions to FDIC-supervised institutions to promote innovation, reduce burden, and meet BSA
requirements more efficiently and effectively.

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As explained previously, the proposed rule would amend 12 CFR
353.3d to add paragraphs d3
through 5, and would apply to all FDIC-supervised institutions. As of June 30, 2020, the FDIC supervised 3,270
institutions.11 The proposal would permit the FDIC to grant relief to FDICsupervised institutions that leverage 11 FDIC-supervised institutions are set forth in 12
U.S.C. 1813q2.

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85 FR 31598 May 26, 2020.
estimate uses the May 2019 75th percentile hourly wage rate for Financial Managers $73.48, Compliance Officers $43.70, Financial Clerks $18.20, and Tellers $17.49 reported by the Bureau of Labor Statistics, National IndustrySpecific Occupational Employment, and Wage Estimates. These wage rates have been adjusted for changes in the Consumer Price Index for all Urban Consumers between May 2019 and June 2020 0.67
percent and grossed up by 51 percent to account for non-monetary compensation as reported by the June 2020 Employer Costs for Employee Compensation Data. The mix of professions varies depending on the task associated with filing SARs including reviewing alerts, documenting reasons why some alerts do not merit a SAR filing, drafting, writing, and submitting SARs, and storing SARs and supporting documentation. For this calculation the FDIC assumed that the mix of professions involved in each task, the percentage of SAR alerts that result in a SAR filing, and the percentage of SARs that are batch filed or filed discretely, and the 13 This
V. Expected Effects
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existing or future technologies to gather and submit the information contained in SARs to the appropriate law enforcement authorities and regulatory agencies in a more efficient and cost effective manner. This change would more closely align the FDICs regulations with those of FinCEN, which has broad statutory authority to issue exemptions from SAR filing requirements. Because the FDICs SAR
regulations do not currently contain any provision by which the FDIC can issue case-by-case exemptions, a situation could arise in which FinCEN grants an exemption from SAR filing requirements to an FDIC-supervised institution that has developed innovative methods for meeting SAR
filing requirements, but the institution would still need to file a SAR. The proposed rule would allow the FDIC to grant exemptions from SAR filing requirements in conjunction with FinCEN to reduce potential regulatory burden.
The FDIC does not have the ability to forecast the number of requests for exemptions that FDIC-supervised institutions will file as a result of this rule, or the number of requests that the FDIC will grant. The proposed rule is likely to pose some increase in compliance costs associated with submitting an exemption request to the FDIC, however the FDIC believes that the costs are likely to be small. The FDIC expects this proposed rule will result in cost savings for FDICsupervised institutions that obtain exemptions from SAR filing requirements. However, the cost savings are projected to be relatively modest.
For example, using the methodology for calculating the cost associated with filing SARs that FinCEN published in May 2020,12 the FDIC estimates that FDIC-supervised institutions incurred roughly $3.8 million 13 in costs in the
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second quarter of 2020 related to reviewing alerts, and drafting, writing, submitting, and storing SAR filings and documentation, which amounts to annual estimated costs of $15.2 million for FDIC-supervised institutions in aggregate.
The FDIC estimated the recordkeeping, reporting, and disclosure costs of filing SARs for each FDICsupervised institution in the second quarter of 2020 using data on SAR
filings for each institution in combination with FinCENs methodology for estimating costs associated with SAR filings.14 The annualized estimated recordkeeping, reporting, and disclosure costs of filing SARs in the second quarter of 2020 do not represent more than 1.9 percent of annual non-interest expense for any FDIC-supervised institution.
Additionally, only one FDIC-supervised institution incurred estimated annualized recordkeeping, reporting, and disclosure costs associated with SAR filing that amounted to more than 5 percent of annual wage and salary expense with the costs equaling 5.2
percent.15 Therefore, the economic benefit of this proposed rule on FDICsupervised institutions is likely to be relatively small. Further, this proposed rule would only allow the FDIC to grant exemptions in instances where safety and soundness and Bank Secrecy Act regulatory requirements would not be compromised, so the proposed rule is also not expected to have any broader negative economic impacts.
The FDIC invites comments on all aspects of this analysis. In particular, would the proposed rule have any costs or benefits to covered entities that the FDIC has not identified?
VI. Alternatives The FDIC has considered alternatives to the proposed rule but believes that the proposed amendments represent the most appropriate option for covered institutions. As discussed earlier, percentage of SARs that contain extended content matches what FinCEN reported in its recent estimates of the costs associated with SAR filing requirements 85 FR 31598.
14 FDIC analysts queried data on SAR filings by institution from a SAR database that FinCEN makes available to regulators and law enforcement agencies.
15 This estimate uses FinCEN data on the SAR
filings of each FDIC-supervised institution, in combination with FinCENs methodology for estimating costs associated with SAR filings, to estimate the SAR-related costs that each FDICsupervised institution incurred in the second quarter of 2020. That estimate is then multiplied by four, and compared to each institutions previous four quarters of merger-adjusted noninterest expense and wages and salary expense reported in Call Report filings from September 2019June 2020.

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