ABA Letter to FinCEN on its Request for Comments on the Suspicious Activity Report Renewal

Policy Division
Financial Crimes Enforcement Network
P.O. Box 39, Vienna, VA 22183

Dear Sir or Madam:

The American Bankers Association (ABA) appreciates the opportunity to comment on the Financial Crimes Enforcement Network (FinCEN) proposal to reassess the burdens associated with reporting suspicious activity through the Suspicious Activity Report (SAR) process. The Bank Secrecy Act (BSA) requires financial institutions to file SARs to report suspected illicit activity, transactions which have no apparent or lawful purpose, or which are not the type of transaction a particular customer would be expected to conduct. The SAR form is critical to the nation’s efforts to combat money laundering and terrorist financing, or as stated by the federal banking agencies, “Suspicious activity reporting forms the cornerstone of the BSA reporting system.” Therefore, the burdens imposed by the SAR are not inconsequential. This request is to comply with the Paperwork Work Reduction Act of 1995 (PRA) which requires government agencies to receive approval from the Office of Management and Budget (OMB) before collecting data, including SAR data.

For the SAR form now in use, FinCEN estimates one hour as the average amount of time needed to process the form. This estimate includes the time needed to collect pertinent information, assess the activity, complete and file the form, and retain records. This estimate applies to all types of filers and all types of illicit activity. ABA supports FinCEN’s decision to reconsider this one-size-fits-all approach.

To refine the current analysis, FinCEN proposes two key changes. First, the PRA estimate will include the cost to determine whether an alert merits a SAR filing, or the cost to document a decision not to file a SAR—factors that ABA members have identified as significant and that should be included.5 Second, FinCEN proposes to calibrate burden more accurately by assigning estimates based on the type of institution doing the filing and the type of SAR being filed, basing these calculations on data from 2019 SAR filings.

Summary of the Comment

Bankers consistently identify BSA compliance as one of the most costly and burdensome regulatory mandates. Therefore, any steps to evaluate more precisely the burden is welcome, and ABA commends FinCEN for taking a closer look at the SAR filing process. While this effort is a good first step, we believe that more needs to be done to assess the true burden associated with SAR filing. FinCEN’s assessment identifies significant costs and burdens, but it omits key components and miscalculates others. As a result, the revised SAR burden is imprecise; actual costs are greater than those FinCEN has identified; and more work is needed to accurately identify SAR burden. ABA stands ready to work with FinCEN to help with that analysis.

As part of the effort to re-assess and re-evaluate the SAR process, it will be important to identify elements and steps not yet included as well as re-evaluate others. For example, while the use of automation and technology has greatly expanded in the years since FinCEN last evaluated SAR burdens, FinCEN’s approach greatly overstates the industry’s reliance on automation. Evidence from the banking sector verifies that the process is still significantly manual and that should be reflected in the burden assessment.

In addition to the costs and burdens identified by FinCEN, ABA urges the agency to consider, and include in the calculation, the burdens created by inadequate communication between law enforcement and the financial industry, which degrades the efficiency and effectiveness of suspicious activity monitoring. For many years, ABA has urged FinCEN to promote law inforcement feedback to the financial sector.6 Although FinCEN has taken steps to improve communication, including the creation of FinCEN Exchange7 and advisories for the industry based on SAR data,8 much more is needed. Providing regular information about law enforcement priorities and criminal activities would facilitate more focused allocation of bank resources, which would generate better and timelier information to law enforcement—and reduce burden. Feedback also is critical to sustain a true public-private partnership in the war against illicit finance, money laundering, and terrorist financing.

One of the policy goals of the PRA is to “Ensure the greatest possible public benefit from and maximize the utility of information created, collected, maintained, used, shared, and disseminated by or for the Federal Government.”9 This standard recognizes that a PRA analysis must weigh the burdens imposed with the benefit to the public of the information collection. However, the current analysis lacks and an estimate of the benefits of SAR filing. Without an understanding of the benefits, it is impossible to fully understand the SAR filing burden.

Download the comment letter to read the full text.