A U.S. House committee’s demand for “at least 150” suspicious activity reports purportedly filed on members of President Joe Biden’s family poses a rare and potentially damaging test of SAR confidentiality rules, former Treasury officials told ACAMS moneylaundering.com.
Rep. James Comer (R-KY) initially launched his push for the SARs in May 2022 as ranking member of the House Oversight Committee with the stated aim of investigating alleged political influence-peddling by Hunter Biden, the president’s son. Treasury officials responded that the request must originate from a committee leader and meet other criteria.
Comer, now chair of the committee, is pressing his highly public demand for large cache of SARs submitted on payments tied to Hunter and James Biden, the president’s brother, while characterizing any delays in meeting his request as a White House-led coverup.
The conflict flared again this week after Comer scheduled a hearing for Friday, March 10, to question Treasury Assistant Secretary Jonathan Davidson, and afterwards repeated his accusations of a coverup when Davidson did not make himself available.
Comer subsequently requested that Davidson meet with committee staff on Tuesday, March 14.
Publicly releasing information on transactions flagged as suspicious could have a chilling effect on future Bank Secrecy Act-related filings, disrupt investigations and unfairly damage the personal reputations of individuals whose names appear in the reports, said Carlton Greene, former general counsel of Treasury’s Financial Crimes Enforcement Network.
“If SARs start getting disclosed, banks are going to start revisiting what they put in,” said Greene, now an attorney at Crowell & Moring in Washington, D.C.
Republican staffers on the House Oversight Committee claimed in a Nov. 17 report to have already obtained SARs filed on Hunter Biden independently of the Treasury Department.
Staffers claim that JPMorgan Chase & Co. filed one of the SARs after reviewing payments Hunter Biden made to adult entertainers—behavior that also emerged in his publicly available divorce proceedings—but did not connect those transactions to any influence-peddling scheme.
The Justice Department’s reported investigation into Hunter Biden’s business dealings would likely render such an unfavorable scenario into a nonstarter, as Comer’s path to accessing additional SARs would vanish if prosecutors choose to indict.
Rules adopted in 1987 give the Treasury Department discretion to provide data from SARs to congressional lawmakers, or to a committee or subcommittee, that submit a written request stating the “criminal, tax or regulatory purpose” of their inquiry and an “official need” for the information being sought.
Davidson cited those rules in September when he rejected Comer’s request for SARs.
But section 2954 of Title 5 of the U.S. Code gives the House Oversight Committee a broad mandate to monitor the executive branch, including through subpoenas for “any information” falling under the panel’s jurisdiction.
Those apparently conflicting authorities set the stage for a courtroom battle unless the two sides reach an agreement.
“Treasury’s really in a no-win situation here, but they’ve got to follow the procedure they feel is right and realize this has long-term implications,” former Treasury Inspector General Eric Thorson, whose agency arrested former FinCEN employee Natalie Mayflower Sours Edwards for leaking SARs to Buzzfeed News in 2018, told moneylaundering.com.
Edwards received a six-month prison sentence and three years of supervised release for violating SAR confidentiality rules.
“As a recipient of SARs, I think they have to be protected,” said Thorson, who previously served as an investigator for the House Government Operations Committee—the forerunner of Comey’s oversight committee—before serving as chief investigator for the Senate Finance Committee.
Congressional investigators previously refrained from requesting SARs because of their speculative nature and the privacy protections that surround them, said Thorson, who compared the reports to raw intelligence files kept by the FBI. “The downside [of release] would be hesitancy of banks to fill out [SARs] if they see them being produced [in public].”
Courts have affirmed that suspicious activity reports are exempt from disclosure during civil proceedings, including in 2004, when the U.S. District Court in Houston ruled in Whitney National Bank v. Karam that banks must not reveal the contents or even the existence of a SAR during discovery.
Legal analysts contacted by moneylaundering.com were unaware of any legal precedent governing congressional access to the reports.
Former House Financial Services Committee Chair Maxine Waters (D-CA) has previously argued that Treasury during past administrations provided copies of SARs upon request.
Waters pushed an unsuccessful bill in 2022 to compel production of SARs after Treasury told her that reports she believed would map out the flow of illicit funds from former Soviet states could only be viewed in private, and not copied.
Davidson’s Sept. 2 letter made a similar offer to Comer, suggesting Treasury would make the reports available for private review without releasing copies.
“We work to meet Congress’s requests while respecting the sensitive nature of the information,” Davidson told Comer in the letter.
Such an approach could head off a conflict between the legislative and executive branches, but the recent release of SARs by Republican staffers in their Nov. 17 report suggests that a compromise through which investigators vow to keep SAR information confidential may prove difficult to reach.
“I think it’s pretty clear [Comer] wants a political vehicle, and that puts a whole different approach to what Treasury would be willing to provide,” said Thorson. “They [committee staff] really need to follow that path and let Treasury work with them to see what would be acceptable, short of handing them a big envelope full of suspicious activity reports.”
Contact Fred Williams at firstname.lastname@example.org
|Topics :||Anti-money laundering|
|Source:||U.S.: Congress , U.S.: Department of Treasury|
|Document Date:||March 10, 2023|