05-10503. Financial Crimes Enforcement Network; Proposed Collection; Comment Request; Suspicious Activity Report by the Securities and Futures Industry

AGENCY:

Financial Crimes Enforcement Network (“FinCEN”), Treasury.

ACTION:

Notice and request for comments.

SUMMARY:

FinCEN invites comment on a proposed information collection contained in a revised form, “Suspicious Activity Report by the Securities and Futures Industry (SAR-SF).” The form will be used by the securities and futures industry to report suspicious activity to the Department of the Treasury. This request for comments also covers 31 CFR 103.17 and 31 CFR 103.19. This request for comments is being made pursuant to the Paperwork Reduction Act of 1995, Pub. L. 104-13, 44 U.S.C. 3506(c)(2)(A).

DATES:

Written comments are welcome and must be received on or before July 25, 2005.

ADDRESSES:

Written comments should be submitted to: Regulatory Policy and Programs Division, Financial Crimes Enforcement Network, Department of the Treasury, P.O. Box 39, Vienna, Virginia 22183, Attention: PRA Comments—SAR-Securities and Futures Industry Form. Comments also may be submitted by electronic mail to the following Internet address: [e-mail], again with a caption, in the body of the text, “Attention: PRA Comments—SAR-Securities and Futures Industry Form.”

Inspection of comments. Comments may be inspected, between 10 a.m. and 4 p.m., in the FinCEN reading room in Washington, DC. Persons wishing to inspect the comments submitted must request an appointment by telephoning [phone].

FOR FURTHER INFORMATION CONTACT:

The FinCEN Regulatory Helpline at 800-949-2732, select option 3.

SUPPLEMENTARY INFORMATION:

Title: Suspicious Activity Report by the Securities and Futures Industry (SAR-SF), 31 CFR 103.17, and 31 CFR 103.19.

OMB Number: 1506-0019.

Form Number: FinCEN Form 101.

Abstract: The statute generally referred to as the “Bank Secrecy Act,” Titles I and II of Public Law 91-508, as amended, codified at 12 U.S.C. 1829b, 12 U.S.C. 1951-1959, and 31 U.S.C. 5311-5332, authorizes the Secretary of the Treasury, 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, and regulatory matters, or in the conduct of intelligence or counter-intelligence activities, to protect against international terrorism, and to implement counter-money laundering programs and compliance procedures.^[1] Regulations implementing Title II of the Bank Secrecy Act appear at 31 CFR part 103. The authority of the Secretary to administer the Bank Secrecy Act has been delegated to the Director of FinCEN.

The Secretary of the Treasury was granted authority in 1992, with the enactment of 31 U.S.C. 5318(g), to require financial institutions to report suspicious transactions. On July 1, 2002, FinCEN issued a final rule requiring brokers or dealers in securities (“broker-dealers”) to report suspicious transactions (“Broker-Dealer SAR rule”). (67 FR 44048). The final Broker-Dealer SAR rule can also be found at 31 CFR 103.19. On August 5, 2002, FinCEN issued a final rule requiring futures commission merchants and introducing brokers in commodities to report suspicious transactions (“FCM SAR rule”). The final FCM SAR rule can also be found at 31 CFR 103.17.

The information collected on the revised form is required to be provided pursuant to 31 U.S.C. 5318(g), 31 CFR 103.17 and 31 CFR 103.19. This information will be made available, in accordance with strict safeguards, to appropriate criminal law enforcement and regulatory personnel, and to the registered securities associations and national securities exchanges (so-called self-regulatory organizations) for use in official performance of their duties, for regulatory purposes and in investigations and proceedings involving domestic and international money laundering, terrorist financing, tax violations, fraud, and other financial crimes.

Broker-dealers, futures commission merchants, and introducing brokers in commodities required to report suspicious transactions, or reporting such transactions voluntarily, will be subject to the protection from liability contained in 31 U.S.C. 5318(g)(3) and to the prohibition contained in 31 U.S.C. 5318(g)(2) against notifying any person involved in the transaction that a suspicious activity report has been filed.

The draft revised SAR-SF is presented only for purposes of soliciting public comment on the form. A number of editorial and simplifying changes are being made to the current SAR-SF, FinCEN Form 101. Item 13, e-mail address, is removed. Item 23(s) (item 22s on the revised form), market where traded, is expanded to accept a three to five letter code entry. Part III, Law Enforcement or Regulatory Contact Information, is deleted and the instructions modified to provide that this information should be included in the narrative when appropriate. Part IV is relabeled as Part III and an optional block has been added for the reporting institution to add an internal control or tracking number to facilitate any coordination with jointly filed reports. In Part IV (new Part III) the type of institution or individual is spelled out for clarity. The guide for completing the narrative is moved to the bottom of page two and the narrative to page three. This change shortens the form by one full page. Finally, the instructions are amended to reflect these changes. In developing the revised form, FinCEN worked with the Securities and Exchange Commission and the Commodity Futures Trading Commission on these changes. This draft form should not be used at this time to report suspicious activity. A final version of the form will be made available at a later date.

Type of Review: Revision of an approved information collection.

Affected public: Business or other for-profit institutions.

Frequency: As required.

Estimated Reporting Burden: Average of 60 minutes per response. (The reporting burden of the regulations (31 CFR 103.17 and 103.19) is reflected in the burden for the form.)

Estimated Recordkeeping Burden for 31 CFR 103.17 or 31 CFR 103.19: 2 hours.

Estimated number of respondents = 8,300.

Estimated Total Annual Responses = 5,600.

Estimated Total Annual Reporting and Recordkeeping Burden: 16,800 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 Bank Secrecy Act 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: (a) 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; (b) the accuracy of the agency's estimate of the burden of the collection of information; (c) ways to enhance the quality, utility, and clarity of the information to be collected: (d) 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 (e) estimates of capital or start-up costs and costs of operation, maintenance and purchase of services to provide information.

Dated: May 16, 2005.

William J. Fox,

Director, Financial Crimes Enforcement Network.

Footnotes

1.  Language expanding the scope of the Bank Secrecy Act to intelligence or counter-intelligence activities to protect against international terrorism was added by Section 358 of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the “USA PATRIOT Act”), P.L. 107-56.