FinCEN Requests Feedback On No-Action Letter Process – Financial Services & More News Here

On June 3, 2022, the Financial Crimes Enforcement Network
(FinCEN) issued an advance discover of proposed
rulemaking¹ (ANPRM) in search of suggestions on whether or not
and the way FinCEN ought to implement a no-motion letter course of. A
no-motion letter course of, which FinCEN was required to contemplate
below the Anti-Money Laundering Act of 2020 (the AML Act), would
present one other mechanism for trade individuals to hunt
suggestions from FinCEN on whether or not sure merchandise, companies, or
actions would violate the federal anti-cash laundering legal guidelines and
laws. Comments are due by August 8, 2022.

Background

A no-motion letter is a software of enforcement discretion by which
an company will difficulty a letter to a regulated entity indicating that
the company doesn’t intend to take or suggest enforcement motion
in opposition to the regulated entity for conduct described by the entity in
a written request to the company.² No-action
letters enable regulated entities to acquire pre-clearance from an
company to have interaction in sure actions with out concern of an
enforcement motion in a while. Currently, three federal monetary
companies businesses difficulty no motion letters: the CFTC, the SEC and
the CFPB.³

Under Section 6305(a) of the AML Act,⁴
FinCEN, in reference to the federal banking businesses and different
authorities stakeholders, was required to (1) conduct an evaluation
of whether or not it ought to set up a no-motion letter course of and (2)
report the outcomes of that evaluation to the Senate Committee on
Banking, Housing, and Urban Affairs and the House Committee on
Financial Services. On June 28, 2021, FinCEN issued that
report⁵ to Congress and concluded that it
ought to interact in a rulemaking to ascertain a no-motion
letter course of.⁶ Now, virtually a yr after
issuing that report, FinCEN has initiated that rulemaking.

Request for Comment

FinCEN is now formally soliciting enter on a possible no-motion
rule. Notably, FinCEN has not but supplied a proposed mannequin for a way
a no-motion letter course of would work, however is as a substitute soliciting
suggestions on 48 particular questions.

Topics lined by the questions within the NPRM embody:

• Whether there are any points with a no-motion letter course of
  that FinCEN didn’t contemplate in its report back to
  Congress;⁷




• Whether there may be any worth in FinCEN issuing a no-motion letter
  if FinCEN cannot bind different businesses with enforcement
  jurisdiction over the identical conduct;⁸




• Whether, and to what extent, FinCEN ought to work with different
  businesses in issuing its no-motion
  letters;⁹




• Whether FinCEN ought to restrict the factual scope or timing of its
  no-motion letters;¹⁰




• Whether FinCEN ought to decide that it has jurisdiction over
  an entity earlier than issuing a no-motion
  letter;¹¹




• Under what circumstances a no-motion letter ought to lose its
  impact or be revoked;¹²




• Whether there ought to be an appeals course of for circumstances by which
  FinCEN declines to difficulty a no-motion
  letter;¹³




• Whether no-motion letters, and/or denials of no-motion letters,
  ought to be made public;¹⁴ and




• How a no-motion letter ought to be distinguished from
  FinCEN’s two present types of regulatory steerage or reduction:
  administrative rulings and exceptive or exemptive
  reduction.¹⁵

Takeaway

As with many rulemaking initiatives below the AML Act reform,
FinCEN’s ANPRM is an extended-awaited alternative for the trade
to affect AML coverage. Currently, FinCEN affords solely
administrative rulings and exceptive or exemptive reduction as
mechanisms for acquiring regulatory steerage or forbearance, each
of that are of restricted utility to the trade and are sometimes not
made public. A no-motion letter course of, in contrast, might present
extra certainty to the trade on FinCEN’s place with
respect to potential actions and may very well be particularly helpful to
the broader trade at a time when know-how and innovation typically
don’t match squarely inside a long time-outdated legal guidelines and laws.

Parties excited by offering suggestions on FinCEN’s
questions ought to submit their remark letters no later than August
8, 2022.

Footnotes

1. No-Action Letter Process, 87 Fed. Reg. 34224
(proposed June 6, 2022) {hereinafter
“ANPRM”}.

2. ANPRM at 34225.

3. ANPRM at 34225, n.21.

4. The AML Act was enacted on January 1, 2021 as a part of
the William M. (Mac) Thornberry National Defense Authorization Act
for Fiscal Year 2021. The present proposed rule is one in every of many
required by Congress below the brand new legislation. For an extended dialogue of
the modifications made by the AML Act, see Arnold & Porter, BSA/AML Reform Under the NDAA (Jan. 5,
2021).

5. FinCEN, A Report to Congress: Assessment of No Action
Letters in Accordance with Section 6305 of the Anti-Money
Laundering Act of 2020 (June 28, 2021).

6. ANPRM at 34224.

7. See Questions 1, 4-5, NPRM at 34226. In its
report, FinCEN thought-about (1) whether or not a cross-regulator no-motion
letter course of was possible and (2) the impact a no-motion letter
course of would have on illicit finance dangers. NPRM at
34226.

8. See Questions 2-3, 6, NPRM at
34226.

9. See Questions 2, 11, 38-41, NPRM at
34226-34227.

10. See Questions 9-10, NPRM at
34226.

11. See Questions 18-19, NPRM at
34227.

12. See Questions 21-22, 24-28, NPRM at
34227.

13. See Questions 29, NPRM at 34227.

14. See Questions 30, 34, 37, NPRM at
34227.

15. See Questions 45-46, NRPM at 34228. In an
administrative ruling, FinCEN guidelines on whether or not a regulated
entity’s previous actions violated Chapter X of the Code of Federal
Regulations (i.e., FinCEN’s laws implementing the Bank
Secrecy Act). Exceptive or exemptive reduction is when FinCEN provides
public discover that sure individuals or transactions or lessons of
individuals or transactions aren’t topic to the necessities of
Chapter X. ANPRM at 34225.

The content material of this text is meant to offer a normal
information to the subject material. Specialist recommendation ought to be sought
about your particular circumstances.

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