Legal Brief: Banks, Governments and Nonprofits Respond to the FinCEN Files

By Laura Cruz

Editor’s Note: In the 19th installment of our series, the ACAMS legal team reviews the regulatory and international financial community’s response to the FinCEN Files.

On Sept. 1, the U.S. Treasury Department’s Financial Crimes Enforcement Network noted in a statement that several news outlets would soon publish articles based on leaked suspicious activity reports, and warned that the unauthorized disclosure of SARs is a crime that may threaten U.S. national security.

Three weeks later, BuzzFeed News and the International Consortium of Investigative Journalists published the first of several articles based on the FinCEN Files, a cache of 2,100 SARs flagging more than $2 trillion worth of potentially illicit transactions occurring over two decades.

BuzzFeed News, ICIJ and other news outlets reported that the FinCEN Files not only revealed details of possible financial crimes, but also highlighted the apparent willingness of several of the world’s largest banks to do business with suspicious clients while only technically complying with anti-money laundering and SAR-filing obligations.

Global regulators and the international financial community reacted swiftly.

On Sept. 22, the Council of Europe and Moneyval, the Financial Action Task Force’s European affiliate, urged broader adoption of the Warsaw Convention, a treaty that requires national financial intelligence units to honor overseas requests to halt suspicious transactions at an earlier stage and thus prevent criminal exploitation of the global financial system.

A day later, the head of the U.K. Parliament’s Treasury Committee wrote a letter to HM Revenue and Customs and the Financial Conduct Authority asking whether the release of the FinCEN Files had impacted their investigations and anti-money laundering supervision, and whether reports describing the U.K. as a “higher-risk” jurisdiction were cause for concern.

Other nations responded to the leaks by reminding firms of their AML and SAR-filing obligations.

On Oct. 5, Malta’s Financial Intelligence Analysis Unit directed financial institutions to review any client relationships that may have fallen under scrutiny as a result of the FinCEN Files to determine whether their customer profiles or risk scores should be updated.

The Monetary Authority of Singapore told the city-state’s lawmakers that the FinCEN Files describe transactions that involve banks from several jurisdictions, that SARs do not always flag criminal activity, and that regulators were reviewing the documents to determine whether Singaporean institutions acted above board.

According to Transparency International, the FinCEN Files confirm that large banks continue to process unmanageably high-risk payments and that the SARs they file to the bureau are often delayed or of poor quality.

The anti-graft group subsequently called on national authorities to pursue more-dissuasive punitive action against banks, their staff and senior managers for AML violations, and end corporate anonymity to prevent criminals from using legal entities to shield their transactions from detection.

On Sept. 21, U.S. Sen. Elizabeth Warren (D-MA) urged Congress to pass the Ending Too Big to Jail Act, which would reform the policy of offering deferred prosecution agreements that allow individual bankers to walk away with minimal penalties for facilitating illicit finance.

On Sept. 25, Hennie Verbeek-Kusters, chair of the Egmont Group of Financial Intelligence Units, responded to the FinCEN Files by emphasizing the important role financial institutions play in reporting suspicious activity, noting the often-transnational dimension of illicit transactions, and restating her organization’s goal to increase cooperation between FIUs.

FinCEN has yet to directly respond to the leak aside from last month’s preemptive warning.

In remarks delivered to attendees of the ACAMS Virtual Las Vegas Conference at the end of last month, FinCEN Director Kenneth Blanco focused on the financial services industry’s response to COVID-19 and the bureau’s proposal to explicitly require that AML-regulated institutions build an “effective and reasonably designed” compliance program.

He did not mention the FinCEN Files.

Contact Laura Cruz at

Topics : Anti-money laundering , Counterterrorist Financing
Source: U.S.: FinCEN
Document Date: October 19, 2020