2024-02747. Agency Information Collection Activities; Proposed Renewal; Comment Request; Renewal Without Change of Reports by Financial Institutions of Suspicious Transactions and FinCEN Form 111-Suspicious Activity Report

AGENCY:

Financial Crimes Enforcement Network (FinCEN), Treasury.

ACTION:

Notice and request for comments.

SUMMARY:

As part of its continuing effort to reduce paperwork and respondent burden, FinCEN invites comment on a renewal, without change, of existing information collection requirements relating to reports of suspicious transactions. Under Bank Secrecy Act regulations, financial institutions are required to report suspicious transactions using FinCEN Form 111 (the suspicious activity report, or SAR). This request for comments is made pursuant to the Paperwork Reduction Act of 1995 (PRA).

DATES:

Written comments are welcome and must be received on or before April 12, 2024.

ADDRESSES:

Comments may be submitted by any of the following methods:

• Federal E-rulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments. Refer to Docket Number FINCEN–2024–0004 and the specific Office of Management and Budget (OMB) control numbers 1506–0001, 1506–0006, 1506–0015, 1506–0019, 1506–0029, 1506–0061, and 1506–0065.

• Mail: Policy Division, Financial Crimes Enforcement Network, P.O. Box 39, Vienna, VA 22183. Refer to Docket Number FINCEN–2024–0004 and OMB control numbers 1506–0001, 1506–0006, 1506–0015, 1506–0019, 1506–0029, 1506–0061, and 1506–0065.

Please submit comments by one method only. Comments will be reviewed consistent with the PRA ^[1] and applicable OMB regulations and guidance. All comments submitted in response to this notice will become a matter of public record. Therefore, you should submit only information that you wish to make publicly available.

FOR FURTHER INFORMATION CONTACT:

FinCEN's Regulatory Support Section at 1–800–767–2825 or electronically at [e-mail].

SUPPLEMENTARY INFORMATION:

I. Statutory and Regulatory Provisions

The legislative framework generally referred to as the Bank Secrecy Act (BSA) consists of the Currency and Foreign Transactions Reporting Act of 1970, as amended by the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act), Public Law 107–56 (October 26, 2001), and other legislation, including the Anti-Money Laundering Act of 2020 (AML Act).^[2] The BSA is codified at 12 U.S.C. 1829b, 12 U.S.C. 1951–1960, and 31 U.S.C. 5311–5314 and 5316–5336, and notes thereto, with implementing regulations at 31 CFR chapter X.

The BSA authorizes the Secretary of the Treasury (the “Secretary”), inter alia, to require financial institutions to keep records and file reports that are determined to have a high degree of usefulness in criminal, tax, or regulatory matters, risk assessments or proceedings, or in the conduct of intelligence or counter-intelligence activities to protect against international terrorism, and to implement AML programs and compliance procedures.^[3] Regulations implementing the BSA appear at 31 CFR chapter X. The authority of the Secretary to administer the BSA has been delegated to the Director of FinCEN.^[4]

Under 31 U.S.C. 5318(g), the Secretary is authorized to require financial institutions to report any suspicious transaction relevant to a possible violation of law or regulation. Regulations implementing 31 U.S.C. 5318(g) are found at 31 CFR 1020.320, 1021.320, 1022.320, 1023.320, 1024.320, 1025.320, 1026.320, 1029.320, and 1030.320.

II. Paperwork Reduction Act of 1995

Title: Reports by Financial Institutions of Suspicious Transactions (31 CFR 1020.320, 1021.320, 1022.320, 1023.320, 1024.320, 1025.320, 1026.320, and 1029.320).

OMB Control Numbers: 1506–0001, 1506–0006, 1506–0015, 1506–0019, 1506–0029, 1506–0061, and 1506–0065.^[5]

Form Number: FinCEN Form 111—Suspicious Transaction Report (SAR).

Abstract: FinCEN is issuing this notice to renew the OMB control numbers for the SAR regulations and form.

Affected Public: Businesses or other for-profit institutions, and non-profit institutions.

Type of Review: Renewal without change of a currently approved information collection.

Frequency: As required.

Estimated Number of Respondents: 11,458 financial institutions.^[6]

Estimated Total Annual Responses: 4,367,197 SARs.^[7]

Estimated Reporting and Recordkeeping Burden per Response: The average estimated PRA burden, measured in hours per SAR, is approximately 1.98 hours.^[8] On May 26, 2020, FinCEN issued a 60-day notice to renew the SAR OMB controls numbers (“2020 Notice”). In the 2020 Notice, FinCEN proposed to expand the scope of factors to consider as part of the PRA burden of complying with SAR requirements. In addition, as described in the 2020 Notice, to better estimate the burden associated with complying with SAR requirements, FinCEN conducted an in-depth analysis of the population of 2019 SAR filing statistics. FinCEN analyzed the 2019 SAR filings grouped by a number of different factors, including the following: (i) the distribution of SAR submissions by type of filing (original or continuing SAR); (ii) the filer's financial institution type; (iii) how many SARs the filer filed in a year; (iv) the method of filing (batch filing versus discrete filing); (v) the SAR narrative length; and (vi) the number of suspicious activities per report. The analysis and calculations detailed in the 2020 Notice ultimately resulted in an estimate of approximately 1.98 hours in filer burden per SAR.

FinCEN received 22 public comments in response to the 2020 Notice. Commenters were generally supportive of FinCEN's efforts to more accurately estimate the PRA burden associated with the SAR filing requirements. Some commenters had specific recommendations regarding factors for FinCEN to consider in future in-depth analysis of the SAR filing population. However, none of those commenters provided specific sources of data to contradict the burden estimate of 1.98 hours of burden per SAR filed. In the absence of public comments to suggest otherwise, FinCEN considers it reasonable to continue to use the estimate of 1.98 hours per SAR filed for the population of 2022 SAR filing statistics as outlined in this notice. In connection with a variety of initiatives FinCEN is undertaking to implement the AML Act, FinCEN intends to conduct, in the future, additional assessments of the PRA burden associated with BSA requirements, including SAR requirements.

Estimated Total Annual Reporting and Recordkeeping Burden: 8,647,050 hours.^[9]

Estimated Total Annual Reporting and Recordkeeping Cost: $326,772,020. This estimate applies the weighted average hourly labor cost of $37.79 per hour ^[10] to the estimated total annual reporting and recordkeeping burden hours above (8,647,050 hours).

An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid OMB control number. Records required to be retained under the BSA must be retained for five years.

Request for Comments

Comments submitted in response to this notice will be summarized and/or included in the request for OMB approval. All comments will become a matter of public record. Comments are invited on: (i) whether the collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; (ii) the accuracy of the agency's estimate of the burden of the collection of information; (iii) ways to enhance the quality, utility, and clarity of the information to be collected; (iv) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology; and (v) estimates of capital or start-up costs and costs of operation, maintenance, and purchase of services to provide information.

Andrea M. Gacki,

Director, Financial Crimes Enforcement Network.

Footnotes

1.  Public Law 104–13, 44 U.S.C. 3506(c)(2)(A).

2.  The AML Act was enacted as Division F, sections 6001–6511, of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021, Public Law 116–283, 134 Stat. 3388 (2021).

3.  Section 358 of the USA PATRIOT Act expanded the purpose of the BSA by including a reference to reports and records “that have a high degree of usefulness in intelligence or counterintelligence activities to protect against international terrorism.” Section 6101 of the AML Act further expanded the purpose of the BSA to cover such matters as preventing money laundering, tracking illicit funds, assessing risk, and establishing appropriate frameworks for information sharing.

4.  Treasury Order 180–01 (Jan. 14, 2020).

5.  The SAR regulatory reporting requirements are currently covered under the following OMB control numbers: 1506–0001 (31 CFR 1020.320—Reports by banks of suspicious transactions); 1506–0006 (31 CFR 1021.320—Reports by casinos of suspicious transactions); 1506–0015 (31 CFR 1022.320—Reports by money services businesses of suspicious transactions); 1506–0019 (31 CFR 1023.320—Reports by brokers or dealers in securities of suspicious transactions, 31 CFR 1024.320—Reports by mutual funds of suspicious transactions, and 31 CFR 1026.320—Reports by futures commission merchants and introducing brokers in commodities of suspicious transactions); 1506–0029 (31 CFR 1025.320—Reports by insurance companies of suspicious transactions); and 1506–0061 (31 CFR 1029.320—Reports by loan or finance companies of suspicious transactions). The PRA does not apply to reports by one government entity to another government entity. For that reason, there is no OMB control number associated with 31 CFR 1030.320—Reports of suspicious transactions by housing government sponsored enterprises. OMB control number 1506–0065 applies to FinCEN Report 111—SAR. An administrative burden of one hour is assigned to each of the SAR regulation OMB control numbers to maintain the requirements in force.

6.  This estimate is based on the observed number of unique filers associated with at least one SAR filing received in calendar year 2022, as reported by the BSA E-Filing System as of 12/31/2022.

7.  This estimate is based on the observed number of SAR filings received in calendar year 2022, as reported by the BSA E-Filing System as of 12/31/2022.

8.   See FinCEN, Agency Information Collection Activities; Proposed Renewal; Comment Request; Renewal Without Change of the Bank Secrecy Act Reports by Financial Institutions of Suspicious Transactions at 31 CFR 1020.320, 1021.320, 10022,320, 1023.320, 1024.320, 1025.320, 1026.320, and 1029.320, and FinCEN Report 111—Suspicious Activity Report,85 FR 31598 (May 26, 2020). See85 FR 31600 in the 2020 Notice for the total number of SARs filed in calendar year 2019 (2,751,694 SARs). See85 FR 31611 in the 2020 Notice for the total estimated recordkeeping and reporting annual PRA burden of complying with the SAR requirements (5,462,026 hours). We are using the estimated hourly burden per SAR calculated for purposes of the 2020 Notice.

9.  This estimate is derived from the calculation 4,367,197 SARs multiplied by 1.98 hours per SAR.

10.  We are using the weighted average hourly labor cost calculated for purposes of the 2020 Notice, which is based on data for calendar year 2019. See85 FR 31611 for the total estimated recordkeeping and reporting annual PRA burden of complying with the SAR requirements in the 2020 Notice (5,462,026 hours). See85 FR 31611 for the total estimated recordkeeping and reporting cost of complying with the SAR requirements in the 2020 Notice ($206,422,989). The average estimated hourly cost per SAR burden hour in the 2020 Notice is $37.79 per hour ($206,422,989 divided by 5,462,026 total burden hours).