Membership of State Banking Institutions in the Federal Reserve System; Reports of Suspicious Activities Under Bank Secrecy Act
| Published date | 22 January 2021 |
| Citation | 86 FR 6576 |
| Record Number | 2021-00033 |
| Section | Proposed rules |
| Court | Federal Reserve System |
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Federal Register / Vol. 86, No. 13 / Friday, January 22, 2021 / Proposed Rules
Authority and Issuance
For the reasons stated in the
SUPPLEMENTARY INFORMATION
, the OCC
proposes to amend 12 CFR parts 21 and
163 as follows:
PART 21—MINIMUM SECURITY
DEVICES AND PROCEDURES,
REPORTS OF SUSPICIOUS
ACTIVITIES, AND BANK SECRECY
ACT COMPLIANCE PROGRAM
■1. The authority citation for part 21 is
revised to read as follows:
Authority: 12 U.S.C. 1, 93a, 161, 1462a,
1463, 1464, 1818, 1881–1884, and 3401–
3422.
■2. In § 21.11, add paragraph (m) to
read as follows:
§ 21.11 Suspicious Activity Report.
* * * * *
(m) Exemptions. (1) The OCC may
exempt any national bank from the
requirements of this section. A national
bank requesting an exemption must
submit a request in writing to the OCC.
In reviewing such requests, the OCC
will consider whether the exemption is
consistent with safe and sound banking
and may consider other appropriate
factors. An exemption shall be
applicable only as expressly stated in
the exemption, may be conditional or
unconditional, may apply to particular
persons or to classes of persons, and
may apply to transactions or classes of
transactions. A national bank requesting
an exemption that also requires an
exemption from the requirements of
FinCEN’s SAR regulation must submit a
request in writing to both the OCC and
FinCEN for approval. In reviewing such
requests, the OCC will consider whether
the exemption is consistent with the
purposes of the Bank Secrecy Act, with
safe and sound banking, and any other
appropriate factors.
(2) The OCC will provide a written
response to the national bank that
submitted the exemption request. A
national bank that has received an
exemption under paragraph (m)(1) of
this section may rely on the exemption
for a period of time to be communicated
by the OCC in its granting of the
exemption.
(3) The OCC may extend the period of
time or may revoke an exemption
granted under paragraph (m)(1) of this
section. Exemptions may be revoked at
the sole discretion of the OCC. The OCC
will provide written notice to the
national bank of the OCC’s intention to
revoke an exemption. Such notice will
include the basis for the revocation and
will provide an opportunity for the
national bank to submit a response to
the OCC. The OCC will consider the
response prior to deciding whether to
revoke an exemption and will notify the
national bank of the OCC’s decision to
revoke an exemption in writing.
(4) With respect to requests for
exemption that will also require an
exemption from the requirements of
FinCEN’s SAR regulation, upon
receiving approval from both the OCC
and FinCEN, the requestor shall be
relieved of its obligations under this
section to the extent stated in such
approvals.
PART 163—SAVINGS
ASSOCIATIONS—OPERATIONS
■3. The authority citation for part 163
is revised to read as follows:
Authority: 12 U.S.C. 161, 1462a, 1463,
1464, 1467a, 1817, 1820, 1828, 1831o, 3806,
5101 et seq., 5412(b)(2)(B); 42 U.S.C. 4106.
■2. In § 163.180, add paragraph (f) to
read as follows:
§ 163.180 Suspicious Activity Reports and
other reports and statements.
* * * * *
(f) Exemptions. (1) The OCC may
exempt any savings association or
service corporation from the
requirements of this section. A savings
association or service corporation
requesting an exemption from the
provisions of this section, must submit
a request in writing to the OCC. In
reviewing such requests, the OCC will
consider whether the exemption is
consistent with safe and sound banking,
and may consider other appropriate
factors. An exemption shall be
applicable only as expressly stated in
the exemption, may be conditional or
unconditional, may apply to particular
persons or to classes of persons, and
may apply to transactions or classes of
transactions. A federal savings
association requesting an exemption
that also requires an exemption from the
requirements of FinCEN’s SAR
regulation must submit a request in
writing to both the OCC and FinCEN for
approval. In reviewing such requests,
the OCC will consider whether the
exemption is consistent with the
purposes of the Bank Secrecy Act, with
safe and sound banking, and any other
appropriate factors.
(2) The OCC will provide a written
response to the savings association or
service corporation that submitted the
exemption request. A savings
association or service corporation that
has received an exemption under
paragraph (f)(1) of this section may rely
on the exemption for a period of time
to be communicated by the OCC in its
granting of the exemption.
(3) The OCC may extend the period of
time or may revoke an exemption
granted under paragraph (f)(1) of this
section. Exemptions may be revoked at
the sole discretion of the OCC. The OCC
will provide written notice to the
savings association or service
corporation of the OCC’s intention to
revoke an exemption. Such notice will
include the basis for the revocation and
will provide an opportunity for the
savings association or service
corporation to submit a response to the
OCC. The OCC will consider the
response prior to deciding whether to
revoke an exemption and will notify the
savings association or service
corporation of the OCC’s decision to
revoke an exemption in writing.
(4) With respect to requests for
exemption that will also require an
exemption from the requirements of
FinCEN’s SAR regulation, upon
receiving approval from both the OCC
and FinCEN, the requestor shall be
relieved of its obligations under this
section to the extent stated in such
approvals.
Brian P. Brooks,
Acting Comptroller of the Currency.
[FR Doc. 2021–00034 Filed 1–21–21; 8:45 am]
BILLING CODE 4810–33–P
FEDERAL RESERVE SYSTEM
12 CFR Part 208
[Docket No. R–1738]
RIN 7100–AG08
Membership of State Banking
Institutions in the Federal Reserve
System; Reports of Suspicious
Activities Under Bank Secrecy Act
AGENCY
: Board of Governors of the
Federal Reserve System (Board).
ACTION
: Notice of proposed rulemaking
with request for public comment.
SUMMARY
: The Board is inviting
comment on a proposed rule that would
modify the requirements to file
Suspicious Activity Reports for state
member banks, Edge and agreement
corporations, U.S. offices of foreign
banking organizations supervised by the
Federal Reserve, and bank holding
companies and their nonbank
subsidiaries. Specifically, the proposed
rule would amend the Board’s
Suspicious Activity Report regulations
to provide for the issuance of
exemptions from the requirements of
those regulations, in full or in part. The
proposed rule is intended, among other
things, to facilitate supervised
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1
12 CFR 208.62; 12 CFR 211.5(k); 12 CFR
211.24(f); 12 CFR 225.4(f). See Board, Supervision
& Regulation Letter (SR) 10–8, ‘‘Suspicious Activity
Report Filing Requirements for Banking
Organizations Supervised by the Federal Reserve’’
(Apr. 27, 2010).
2
See generally 58 FR 47206 (Sept. 3, 1993)
(codifying the Board’s criminal referral procedures);
see also SR 88–9, ‘‘New Criminal Referral Form and
Updated Criminal Referral Procedures’’ (Mar. 18,
1988).
3
Public Law 102–550, 106 Stat. 3672 (1992).
4
31 U.S.C. 5318(g)(1).
5
61 FR 4326 (Feb. 5, 1996).
6
61 FR 4338 (Feb. 5, 1996).
7
See 31 U.S.C. 5318(a)(7).
8
31 CFR 1010.970(a).
institutions in meeting Bank Secrecy
Act requirements more efficiently and
effectively, including through
development of innovative solutions.
DATES
: Comments must be received by
February 22, 2021.
ADDRESSES
: You may submit comments,
identified by Docket No. R–1738 and
RIN 7100–AG08, by any of the following
methods:
•Agency website: http://
www.federalreserve.gov. Follow the
instructions for submitting comments at
https://www.federalreserve.gov/apps/
foia/proposedregs.aspx.
•Email: regs.comments@
federalreserve.gov. Include docket
number and RIN in the subject line of
the message.
•Fax: (202) 452–3819 or (202) 452–
3102.
•Mail: Ann E. Misback, Secretary,
Board of Governors of the Federal
Reserve System, 20th Street and
Constitution Avenue NW, Washington,
DC 20551.
All public comments are available
from the Board’s website at http://
www.federalreserve.gov/generalinfo/
foia/ProposedRegs.cfm as submitted,
unless modified for technical reasons or
to remove personally identifiable
information at the commenter’s request.
Accordingly, comments will not be
edited to remove any identifying or
contact information. Public comments
may also be viewed electronically or in
paper in Room 146, 1709 New York
Avenue NW, Washington, DC 20006,
between 9:00 a.m. and 5:00 p.m. on
weekdays. For security reasons, the
Board requires that visitors call (202)
452–3684 to make an appointment to
inspect comments.
FOR FURTHER INFORMATION CONTACT
:
Jason Gonzalez, Assistant General
Counsel, (202) 452–3725, or Bernard
Kim, Senior Counsel, (202) 452–3083,
Legal Division; or Suzanne Williams,
Deputy Associate Director, (202) 452–
3513, or Koko Ives, Manager, (202) 973–
6163, Division of Supervision and
Regulation, Board of Governors of the
Federal Reserve System, 20th Street and
Constitution Avenue NW, Washington,
DC 20551. Users of Telecommunication
Device for Deaf (TDD) only, call (202)
263–4869.
SUPPLEMENTARY INFORMATION
:
I. Introduction
Pursuant to the Board’s Regulations
H, K, and Y, state member banks, Edge
and agreement corporations, U.S. offices
of foreign banking organizations
supervised by the Federal Reserve, and
bank holding companies and their
nonbank subsidiaries must file
Suspicious Activity Reports (SARs) to
report known or suspected violations of
U.S. law.
1
The proposed rule would
amend the Board’s SAR regulations to
expressly provide for exemptions from
the regulations’ SAR requirements, in
full or in part and subject to the Board’s
approval.
II. Background
The Board, along with the other
federal banking agencies, is charged
with safeguarding the safety and
soundness of its supervised institutions.
Pursuant to its safety-and-soundness
authority and enabling statutes, the
Board has long required a member bank,
a bank holding company and its
nonbank subsidiaries, an Edge Act or
Agreement corporation, or a U.S. branch
or agency of a foreign bank to refer
potential violations of law arising from
transactions that flow through those
institutions to relevant law enforcement
authorities, because financial crimes can
pose serious threats to a financial
institution’s continued viability and, if
unchecked, may undermine the public
confidence in the financial services
industry.
2
In 1992, Congress passed the
Annunzio-Wylie Anti-Money
Laundering Act, which redesigned the
criminal referral process applicable to
Board-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 to ‘‘report
any suspicious transaction relevant to a
possible violation of law or
regulation.’’
4
Thereafter, the
Department of the Treasury, in
consultation with the federal banking
agencies and law enforcement,
developed the modern SAR form and
reporting process, which standardized
the reporting forms, eliminated
duplicate filings, 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 (FinCEN), a
bureau of the Department of the
Treasury, issued its implementing SAR
regulations in 1996. The regulations
require financial institutions subject to
the 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
Board 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 FinCEN’s
BSA reporting requirements, and further
refine the reporting processes.
6
As a result of this redesign and
FinCEN’s implementing regulations,
relevant institutions supervised by the
Board are currently required to file
SARs under both the Board’s and
FinCEN’s SAR regulations. These
regulations are not identical but are
substantially similar with regard to the
specified BSA reporting obligations
required by FinCEN, in that they both
require banks, among other things, to
file SARs relating to money laundering
and transactions designed to evade BSA
reporting requirements, as well as
maintain the confidentiality of a SAR in
most circumstances. However, the
Board’s SAR regulations cover a slightly
broader range of transactions, for
example, by requiring SARs to be filed
for any known or suspected instance of
insider abuse in any amount, and
further requiring the prompt notification
to the institution’s board of directors
when a SAR has been filed.
The Secretary of the Treasury has
statutory authority to grant exemptions
from the requirements of the BSA,
which includes FinCEN’s SAR
requirements.
7
The regulation
implementing this exemption authority
provides:
8
The Secretary [of the Treasury], in his sole
discretion, may by written order or
authorization make exceptions to or grant
exemptions from the requirements of this
chapter. Such exceptions or exemptions may
be conditional or unconditional, may apply
to particular persons or to classes of persons,
and may apply to particular transactions or
classes of transactions. They shall, however,
be applicable only as expressly stated in the
order of authorization, and they shall be
revocable in the sole discretion of the
Secretary.
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9
Joint Statement on Innovative Efforts to Combat
Money Laundering and Terrorist Financing (Dec. 3,
2018), available at https://www.federalreserve.gov/
newsevents/pressreleases/files/
bcreg20181203a1.pdf.
The Secretary of the Treasury has
delegated this exemption authority to
FinCEN. The purpose of the Board’s
proposed rule, which would largely
parallel FinCEN’s general exemptive
authority, would be to facilitate the
Board’s granting of relief to a bank
seeking an exemption from the
requirements of the Board’s SAR
regulations.
The decision to grant or deny such an
exemption would be made from a
safety-and-soundness and anti-money
laundering regulatory perspective. In
particular, the Board’s view is that these
exemptions would facilitate supervised
institutions to meet BSA requirements
more efficiently and effectively,
including through development of
innovative solutions. Financial
technology and innovation continue to
develop in the area of monitoring and
reporting financial crime and terrorist
financing, and the Board recognizes the
increasing importance of regulatory
flexibility to such efforts. Recently, the
Board, along with the other federal
banking agencies and FinCEN, issued a
statement encouraging banks to take
innovative approaches to meet their
BSA/anti-money laundering (BSA/AML)
compliance obligations.
9
The statement
explained that banks are encouraged to
consider, evaluate, and where
appropriate, responsibly implement
innovative approaches in this area.
Today, innovative approaches and
technological developments in the area
of SAR monitoring, investigation, and
filings may involve, among other things:
(i) Automated form population using
natural language processing, transaction
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.
Accordingly, exemptive relief may be
helpful to foster innovation in this area,
as the Board expects that new
technologies will continue to prompt
additional innovative approaches
related to SAR filing and monitoring.
It is important to recognize that any
Board-issued exemptions from its SAR
regulations would not relieve the
supervised institution from the
independent obligation to comply with
FinCEN’s SAR regulations, if applicable.
To the extent that the supervised
institution is subject to requirements
imposed by both the Board’s and
FinCEN’s SAR regulations, the
institution would need to acquire an
exemption from both the Board and
FinCEN. The Board expects to
coordinate with FinCEN when handling
such parallel exemption requests, and
accordingly, the Board’s proposed rule
would require FinCEN’s concurrence
with regard to such exemptions. As
explained above, however, the Board’s
SAR regulation imposes additional
requirements not included in FinCEN’s
regulation. To the extent the supervised
institution is subject to a requirement
imposed by the Board’s SAR regulations
alone (and not a parallel FinCEN
requirement), the proposed rule would
allow the Board to exempt the
institution from that requirement
without FinCEN’s concurrence.
III. The Proposal
The proposed rule would provide for
the issuance of exemptions from the
requirements, in full or in part, of the
Board’s SAR regulations. Upon
receiving a written request from a
Board-supervised institution, the Board
would determine whether the
exemption is consistent with safe and
sound banking. The Board would also
seek FinCEN’s determination whether
the exemption is consistent with the
purposes of the BSA, as applicable,
where an exemption request involves an
exemption from the requirements to file
a SAR required by FinCEN regulations
implementing the BSA.
The proposed rule would require the
Board to seek FinCEN’s concurrence
regarding any exemptions that involve
SAR provisions relating to potential
money laundering or violations of the
BSA or other unusual activity covered
by FinCEN’s SAR regulation. The
proposed rule would allow the Board to
consult with FinCEN regarding other
exemption requests. The Board may also
consult with the other state and federal
banking agencies before granting any
exemption.
An approved exemption under the
proposed rule may apply to only certain
parts of the SAR requirements. It may be
conditional or unconditional, may apply
to particular persons or to classes of
persons, and may apply to transactions
or classes of transactions. In addition,
the proposed rule provides that the
Board may grant an exemption for a
specified time period or extend the time
period of a previously granted
exemption. Finally, the proposed rule
provides that the Board may, in its sole
discretion, revoke previously granted
exemptions.
The changes made by the proposed
rule would add a new paragraph (l) to
§ 208.62 of Regulation H (12 CFR
208.62), which concerns the SAR filing
obligations of member banks. Sections
211.5(k) and 211.24(f) of Regulation K
(12 CFR 211.5(k) and 211.24(f)) and
§ 225.4(f) of Regulation Y (12 CFR
225.4(f)) make § 208.62 of Regulation H
applicable to Edge and Agreement
corporations, the U.S. branches and
agencies of foreign banks (except a
Federal branch or Federal agency or a
state branch that is insured by the
Federal Deposit Insurance Corporation),
a representative office of a foreign bank,
and bank holding companies and their
nonbank subsidiaries, respectively. This
means that the changes applicable to
member banks will also be applicable to
the suspicious activity reporting
responsibilities of these other domestic
and foreign banking organizations
supervised by the Federal Reserve,
including bank holding companies,
Edge corporations, and the U.S.
branches and agencies of foreign banks.
The Board welcomes comments on
any aspect of the proposed rule, in
particular, with regard to whether
additional or different factors or
standards should be applied in the
determination whether to grant an
exemption request, as well as the form
and manner of the Board’s response to
an exemption request.
IV. Administrative Law Matters
A. Solicitation of Comments and Use of
Plain Language
Section 722 of the Gramm-Leach-
Bliley Act (Pub. L. 106–102, 113 Stat.
1338, 1471, 12 U.S.C. 4809) requires the
Federal banking agencies to use plain
language in all proposed and final rules
published after January 1, 2000. The
Board has sought to present the
proposed rule in a simple and
straightforward manner, and invites
comment on the use of plain language.
B. Paperwork Reduction Act Analysis
Certain provisions of the proposed
rule contain ‘‘collections of
information’’ within the meaning of the
Paperwork Reduction Act of 1995 (PRA)
(44 U.S.C. 3501–3521). In accordance
with the requirements of the PRA, the
Board may not conduct or sponsor, and
a respondent is not required to respond
to, an information collection unless it
displays a currently valid Office of
Management and Budget (OMB) control
number. The Board reviewed the
proposed rule under the authority
delegated to the Board by OMB. The
proposed rule contains reporting
requirements subject to the PRA. To
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Section 208.62(e) encourages respondents to
file SARs with state and local law enforcement
agencies. In practice, these agencies have access to
SARs through FinCEN’s database, making it
unnecessary for respondents to file SARs directly
with these agencies. Therefore, the Board assumes
de minimus burden for this requirement.
11
5 U.S.C. 603.
12
See 13 CFR 121.201.
implement these requirements, the
Board is revising the Suspicious
Activity Report (FR 2230; OMB No.
7100–0212),
Comments are invited on:
a. Whether the collections of
information are necessary for the proper
performance of the agencies’ functions,
including whether the information has
practical utility;
b. The accuracy or the estimate of the
burden of the information collections,
including the validity of the
methodology and assumptions used;
c. Ways to enhance the quality,
utility, and clarity of the information to
be collected;
d. Ways to minimize the burden of the
information collections on respondents,
including through the use of automated
collection techniques or other forms of
information technology; and
e. Estimates of capital or startup costs
and costs of operation, maintenance,
and purchase of services to provide
information.
All comments will become a matter of
public record. Comments on aspects of
this notice that may affect reporting,
recordkeeping, or disclosure
requirements and burden estimates
should be sent to the addresses listed in
the
ADDRESSES
section of this document.
A copy of the comments may also be
submitted to the OMB desk officer for
the agencies by mail to U.S. Office of
Management and Budget, 725 17th
Street NW, #10235, Washington, DC
20503; facsimile to (202) 395–5806; or
email oira_submission@omb.eop.gov,
Attention, Federal Reserve Desk Officer.
Proposed Information Collection
Title of information collection:
Suspicious Activity Report.
Agency form number: FR 2230.
OMB control number: 7100–0212.
Frequency: On occasion.
Affected public: Businesses or other
for-profit.
Respondents: State member banks,
bank holding companies and their
nonbank subsidiaries, Edge and
agreement corporations, and the U.S.
branches and agencies, representative
offices, and nonbank subsidiaries of
foreign banks supervised by the Board.
Description of information collection:
Certain institutions supervised by the
Board are required, pursuant to the
Bank Secrecy Act (BSA) and the Board’s
regulations, to file a SAR to report
known or suspected violations of federal
law or a suspicious transaction related
to a money laundering activity or a
violation of the BSA. Institutions file a
SAR electronically through a secure
network created and maintained by the
administrator of the BSA, the
Department of the Treasury’s Financial
Crimes Enforcement Network (FinCEN).
Current actions: The proposed rule
would provide for the issuance of
exemptions from the requirements, in
full or in part, of the Board’s SAR
regulations. In section 208.62(l), upon
receiving a written request from a
Board-supervised institution, the Board
would determine whether the
exemption is consistent with safe and
sound banking. The written request for
exemption would be a new reporting
requirement under the PRA. The Board
estimates that the average hours per
response would be 8 hours.
In addition, because FinCEN already
accounts for the reporting burden for all
respondents (including Board-
supervised institutions) to file a SAR
(see OMB Control No. 1506–0065) the
Board would remove this same
reporting burden from the FR 2230.
10
Legal authorization and
confidentiality: The FR 2230 is
authorized pursuant to the Federal
Reserve Act (12 U.S.C. 248(a)(1), 602,
and 625), Federal Deposit Insurance Act
(12 U.S.C. 1818(s)), Bank Holding
Company Act of 1956 (12 U.S.C.
1844(c)), and International Banking Act
of 1978 (12 U.S.C. 3105(c)(2) and
3106(a)). The FR 2230 is mandatory.
SARs are confidential and exempt
from Freedom of Information Act
(FOIA) disclosure by 31 U.S.C. 5319,
which specifically provides that SARs
‘‘are exempt from disclosure under
section 552 of title 5’’ and FOIA
exemption 3 (5 U.S.C. 552(b)(3))
(matters ‘‘specifically exempted from
disclosure by statute’’).
Estimated number of respondents:
Reporting Section 208.62(l)–3.
Estimated average hours per response:
Reporting Section 208.62(l)–8.
Current estimated annual burden
hours: 439,520.
Estimated annual burden hours due
to proposed revisions: Exemption
request, 24; removal of SAR filing,
(439,520).
Proposed estimated annual burden
hours: 24.
C. Regulatory Flexibility Act Analysis
The Regulatory Flexibility Act, 5
U.S.C. 601 et seq., (RFA), generally
requires an agency, in connection with
a proposed rule, to prepare an Initial
Regulatory Flexibility Analysis
describing the impact of the rule on
small entities based on size standards of
the Small Business Administration
(SBA) or to certify that the proposed
rule would not have a significant
economic impact on a substantial
number of small entities. An initial
regulatory flexibility analysis must
contain (1) a description of the reasons
why action by the agency is being
considered; (2) a succinct statement of
the objectives of, and legal basis for, the
proposed rule; (3) a description of, and,
where feasible, an estimate of the
number of small entities to which the
proposed rule will apply; (4) a
description of the projected reporting,
recordkeeping, and other compliance
requirements of the proposed rule,
including an estimate of the classes of
small entities that will be subject to the
requirement and the type of professional
skills necessary for preparation of the
report or record; (5) an identification, to
the extent practicable, of all relevant
federal rules which may duplicate,
overlap with, or conflict with the
proposed rule; and (6) a description of
any significant alternatives to the
proposed rule which accomplish its
stated objectives. The Board has
considered the potential impact of the
proposed rule on small entities in
accordance with section 603 of the
RFA.
11
Under regulations issued by the
SBA, a small entity includes a bank,
bank holding company, or savings and
loan holding company with assets of
$600 million or less and trust
companies with annual receipts of $41.5
million or less.
12
As of March 2020,
there were approximately 2,925 small
bank holding companies, 132 small
savings and loan holding companies,
and 472 small state member banks. As
of March 2020, the Board does not
supervise any small trust companies.
Based on its analysis and for the
reasons stated below, the Board believes
that this proposed rule will not have a
significant economic impact on a
substantial number of small entities.
Nevertheless, the Board is publishing
and inviting comment on this initial
regulatory flexibility analysis. A final
regulatory flexibility analysis may be
conducted after any comments received
during the public comment period have
been considered. The Board welcomes
comment on all aspects of its analysis.
In particular, the Board requests that
commenters describe the nature of any
impact on small entities and provide
empirical data to illustrate and support
the extent of the impact.
As discussed above, the purpose of
the Board’s proposed rule is to facilitate
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Federal Register / Vol. 86, No. 13 / Friday, January 22, 2021 / Proposed Rules
13
12 U.S.C. 4802(a).
14
12 U.S.C. 4802(b).
the Board’s granting of relief to a bank
seeking relief from the requirements of
the Board’s SAR regulations, when such
relief would be beneficial from a safety-
and-soundness and anti-money
laundering regulatory perspective. The
proposed rule would be issued pursuant
to the Board’s safety-and-soundness
authority over supervised institutions.
The proposed rule will apply to small
bank holding companies and their
nonbank subsidiaries and small state
member banks as well as Edge and
agreement corporations, and U.S. offices
of foreign banking organizations
supervised by the Federal Reserve. The
Board does not expect that the proposal
would impose a significant cost on
small banking organizations due to
compliance, recordkeeping, and
reporting updates from this proposal.
The Board does not believe that the
proposal would result in any significant
economic impact on banking
organizations as there are no projected
recordkeeping, reporting, or other
compliance requirements associated
with the proposal. Moreover, the
proposal does not impose any new
requirements on banking organization,
as applying for an exemption under the
proposal would be entirely voluntary. In
addition, the Board is not aware of any
federal rules that duplicate, overlap, or
conflict with the proposed rule. For
these reasons, the Board believes that
the proposed rule will not have a
significant economic impact on a
substantial number of small entities
supervised by the Board, and believes
that there are no significant alternatives
to the proposed rule that would reduce
the economic impact on small banking
organizations supervised by the Board.
D. Riegle Community Development and
Regulatory Improvement Act of 1994
Pursuant to section 302(a) of the
Riegle Community Development and
Regulatory Improvement Act (RCDRIA),
in determining the effective date and
administrative compliance requirements
for new regulations that impose
additional reporting, disclosure, or other
requirements on insured depository
institutions, each federal banking
agency must consider, consistent with
principles of safety and soundness and
the public interest, any administrative
burdens that such regulations would
place on insured depository institutions,
including small depository institutions,
and customers of depository
institutions, as well as the benefits of
such regulations.
13
In addition, section
302(b) of RCDRIA requires new
regulations and amendments to
regulations that impose additional
reporting, disclosures, or other new
requirements on insured depository
institutions generally to take effect on
the first day of a calendar quarter that
begins on or after the date on which the
regulations are published in final
form.
14
The proposed rule would not
impose additional reporting, disclosure,
or other requirements; therefore the
requirements of the RCDRIA do not
apply.
However, the agencies invite
comments that further will inform the
agencies’ consideration of RCDRIA.
List of Subjects in 12 CFR Part 208
Accounting, Agriculture, Banks,
Banking, Confidential business
information, Consumer protection,
Crime, Currency, Federal Reserve
System, Flood insurance, Insurance,
Investments, Mortgages, Reporting and
recordkeeping requirements, Securities.
Authority and Issuance
For the reasons stated in the
preamble, the Board of Governors of the
Federal Reserve System proposes to
amend 12 CFR part 208 as follows:
PART 208—MEMBERSHIP OF STATE
BANKING INSTITUTIONS IN THE
FEDERAL RESERVE SYSTEM
(REGULATION H)
■1. The authority citation for part 208
continues to read as follows:
Authority: 12 U.S.C. 24, 36, 92a, 93a,
248(a), 248(c), 321–338a, 371d, 461, 481–486,
601, 611, 1814, 1816, 1817(a)(3), 1817(a)(12),
1818, 1820(d)(9), 1833(j), 1828(o), 1831,
1831o, 1831p–1, 1831r–1, 1831w, 1831x,
1835a, 1882, 2901–2907, 3105, 3310, 3331–
3351, 3905–3909, 5371, and 5371 note; 15
U.S.C. 78b, 78I(b), 78l(i), 780–4(c)(5), 78q,
78q–1, 78w, 1681s, 1681w, 6801, and 6805;
31 U.S.C. 5318; 42 U.S.C. 4012a, 4104a,
4104b, 4106, and 4128.
■2. In § 208.62, add a new paragraph (l)
to read as follows:
§ 208.62 Suspicious activity reports.
* * * * *
(l) Exemptions.
(1)(i) The Board may exempt any
member bank from the requirements of
this section. Upon receiving a written
request from a member bank, the Board
will consider whether the exemption is
consistent with safe and sound banking
and may consider other appropriate
factors. The Board also would seek
FinCEN’s determination whether the
exemption is consistent with the
purposes of the Bank Secrecy Act, if
applicable. The exemption shall be
applicable only as expressly stated in
the exemption, may be conditional or
unconditional, may apply to particular
persons or classes of persons, and may
apply to transactions or classes of
transactions.
(ii) The Board will seek FinCEN’s
concurrence with regard to any
exemption request that would also
require an exemption from FinCEN’s
SAR regulations, and may consult with
FinCEN regarding other exemption
requests. The Board also may consult
with the other state and federal banking
agencies and consider comments before
granting any exemption.
(2) The Board will provide a written
response to the member bank that
submitted the exemption request after
considering whether the exemption is
consistent with safe and sound banking,
consulting with the appropriate
agencies, and seeking concurrence when
appropriate. A member bank that has
received an exemption under paragraph
(1) of this section may rely on the
exemption for a period of time to be
communicated by the Board in its
granting of the exemption, which may
be indefinite.
(3) The Board may extend the period
of time or may revoke an exemption
granted under paragraph (1) of this
section. Exemptions may be revoked at
the sole discretion of the Board. The
Board will provide written notice to the
member bank of the Board’s intention to
revoke an exemption. Such notice will
include the basis for the revocation and
will provide an opportunity for the
member bank to submit a response to
the Board. The Board will consider the
response prior to deciding whether to
revoke an exemption, and will notify
the member bank of the Board’s final
decision to revoke an exemption in
writing.
By order of Board of Governors of the
Federal Reserve System.
Ann Misback,
Secretary of the Board.
[FR Doc. 2021–00033 Filed 1–21–21; 8:45 am]
BILLING CODE 6210–01–P
FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Part 353
RIN 3064–AF56
Exemptions to Suspicious Activity
Report Requirements
AGENCY
: Federal Deposit Insurance
Corporation.
ACTION
: Notice of proposed rulemaking.
SUMMARY
: The FDIC is inviting comment
on a proposed rule that would modify
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