Standards Governing the Release of a Suspicious Activity Report, 75583-75586 [2010-29871]
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Federal Register / Vol. 75, No. 232 / Friday, December 3, 2010 / Rules and Regulations
statutory prohibition against the
disclosure by financial institutions and
by the government of SAR information
and clarifies the scope of the safe harbor
from liability for institutions that report
suspicious activities. Therefore,
pursuant to section 605(b) of the RFA,
the OCC hereby certifies that this final
rule will not have a significant
economic impact on a substantial
number of small entities. Accordingly, a
regulatory flexibility analysis is not
needed.
Paperwork Reduction Act
We have reviewed the final rule in
accordance with the Paperwork
Reduction Act of 1995 (44 U.S.C. 3506;
5 CFR 1320, Appendix A.1) (PRA) and
have determined that it does not contain
any ‘‘collections of information’’ as
defined by the PRA.
Unfunded Mandates Reform Act of 1995
Section 202 of the Unfunded
Mandates Reform Act of 1995, Public
Law 104–4 (2 U.S.C. 1532) (Unfunded
Mandates Act), requires that an agency
prepare a budgetary impact statement
before promulgating any rule likely to
result in a Federal mandate that may
result in the expenditure by State, local,
and Tribal governments, in the
aggregate, or by the private sector of
$100 million or more in any one year.
If a budgetary impact statement is
required, section 205 of the Unfunded
Mandates Act also requires an agency to
identify and consider a reasonable
number of regulatory alternatives before
promulgating a rule.
The OCC has determined that this
final rule will not result in expenditures
by State, local, and Tribal governments,
or by the private sector, of $100 million
or more in any one year. Accordingly,
this proposal is not subject to section
202 of the Unfunded Mandates Act.
List of Subjects in 12 CFR Part 21
Crime, Currency, National banks,
Reporting and recordkeeping
requirements, Security measures.
Authority and Issuance
For the reasons set forth in the
preamble, part 21 of title 12 of the Code
of Federal Regulations is amended as
follows:
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■
PART 21—MINIMUM SECURITY
DEVICES AND PROCEDURES,
REPORTS OF SUSPICIOUS
ACTIVITIES, AND BANK SECRECY
ACT COMPLIANCE PROGRAM
1. The authority citation for part 21
continues to read as follows:
■
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Authority: 12 U.S.C. 93a, 1818, 1881–1884,
and 3401–3422; and 31 U.S.C. 5318.
2. Section 21.11 is amended by
revising paragraphs (b)(3), (c)
introductory text, (k) and (l) to read as
follows:
■
§ 21.11
Suspicious Activity Report.
*
*
*
*
*
(b) * * *
(3) SAR means a Suspicious Activity
Report.
(c) SARs required. A national bank
shall file a SAR with the appropriate
Federal law enforcement agencies and
the Department of the Treasury on the
form prescribed by the OCC and in
accordance with the form’s instructions.
The bank shall send the completed SAR
to FinCEN in the following
circumstances:
*
*
*
*
*
(k) Confidentiality of SARs. A SAR,
and any information that would reveal
the existence of a SAR, are confidential,
and shall not be disclosed except as
authorized in this paragraph (k).
(1) Prohibition on disclosure by
national banks. (i) General rule. No
national bank, and no director, officer,
employee, or agent of a national bank,
shall disclose a SAR or any information
that would reveal the existence of a
SAR. Any national bank, and any
director, officer, employee, or agent of
any national bank that is subpoenaed or
otherwise requested to disclose a SAR,
or any information that would reveal the
existence of a SAR, shall decline to
produce the SAR or such information,
citing this section and 31 U.S.C.
5318(g)(2)(A)(i), and shall notify the
following of any such request and the
response thereto:
(A) Director, Litigation Division,
Office of the Comptroller of the
Currency; and
(B) The Financial Crimes Enforcement
Network (FinCEN).
(ii) Rules of construction. Provided
that no person involved in any reported
suspicious transaction is notified that
the transaction has been reported, this
paragraph (k)(1) shall not be construed
as prohibiting:
(A) The disclosure by a national bank,
or any director, officer, employee or
agent of a national bank of:
(1) A SAR, or any information that
would reveal the existence of a SAR, to
the OCC, FinCEN, or any Federal, State,
or local law enforcement agency; or
(2) The underlying facts, transactions,
and documents upon which a SAR is
based, including, but not limited to,
disclosures:
(i) To another financial institution, or
any director, officer, employee or agent
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of a financial institution, for the
preparation of a joint SAR; or
(ii) In connection with certain
employment references or termination
notices, to the full extent authorized in
31 U.S.C. 5318(g)(2)(B); or
(B) The sharing by a national bank, or
any director, officer, employee, or agent
of a national bank, of a SAR, or any
information that would reveal the
existence of a SAR, within the bank’s
corporate organizational structure for
purposes consistent with Title II of the
Bank Secrecy Act as determined by
regulation or in guidance.
(2) Prohibition on disclosure by the
OCC. The OCC will not, and no officer,
employee or agent of the OCC, shall
disclose a SAR, or any information that
would reveal the existence of a SAR,
except as necessary to fulfill official
duties consistent with Title II of the
Bank Secrecy Act. For purposes of this
section, official duties shall not include
the disclosure of a SAR, or any
information that would reveal the
existence of a SAR, in response to a
request for use in a private legal
proceeding or in response to a request
for disclosure of non-public OCC
information under 12 CFR 4.33.
(l) Limitation on liability. A national
bank and any director, officer, employee
or agent of a national bank that makes
a voluntary disclosure of any possible
violation of law or regulation to a
government agency or makes a
disclosure pursuant to this section or
any other authority, including a
disclosure made jointly with another
financial institution, shall be protected
from liability to any person for any such
disclosure, or for failure to provide
notice of such disclosure to any person
identified in the disclosure, or both, to
the full extent provided by 31 U.S.C.
5318(g)(3).
Dated: August 16, 2010.
John Walsh,
Acting Comptroller of the Currency.
[FR Doc. 2010–29880 Filed 12–2–10; 8:45 am]
BILLING CODE 4810–33–P
DEPARTMENT OF THE TREASURY
Office of Thrift Supervision
12 CFR Part 510
[Docket ID OTS–2010–0016]
RIN 1550–AC28
Standards Governing the Release of a
Suspicious Activity Report
Office of Thrift Supervision,
Treasury.
AGENCY:
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ACTION:
Federal Register / Vol. 75, No. 232 / Friday, December 3, 2010 / Rules and Regulations
Final rule.
The Office of Thrift
Supervision (OTS) is revising its
regulations governing the release of
unpublished OTS information. The
primary change clarifies that the OTS’s
decision to release a Suspicious Activity
Report (SAR) is governed by the
standards set forth in amendments to
the OTS’s SAR regulation that are part
of a separate, but simultaneous,
rulemaking.
DATES: The final rule is effective January
3, 2011.
FOR FURTHER INFORMATION CONTACT:
Marvin Shaw, Senior Attorney,
Regulations and Legislation (202–906–
6639); Dirk Roberts, Deputy Chief
Counsel, Litigation (202–906–7631),
Office of Thrift Supervision, 1700 G
Street, NW., Washington, DC 20552.
SUPPLEMENTARY INFORMATION:
SUMMARY:
I. Introduction
On March 9, 2009, the Office of Thrift
Supervision (OTS) issued a notice of
proposed rulemaking to revise its
regulations governing the release of
unpublished OTS information.1 The
proposal was intended to clarify that
OTS’s decision to release a Suspicious
Activity Report (SAR) would be
governed by the standards set forth in
proposed amendments to OTS’s SARS
regulation at 12 CFR 563.180,
Suspicious Activity Reports and other
reports and statements, that were part of
a separate, but simultaneous
rulemaking.
OTS received no comments to the
proposed amendments to section 510.5,
although the agency did receive
comments to the proposed amendments
to section 563.180. Those comments are
addressed in the part 563 final rule
published elsewhere in today’s Federal
Register.
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II. Final Rule
A. Overview
OTS is amending its regulations set
forth in 12 CFR part 510, governing the
release of unpublished OTS
information. First, the amendments
conform section 510.5 to amendments to
the OTS’s SAR confidentiality rule, 12
CFR 563.180 that are being adopted as
part of a separate, but simultaneous,
rulemaking that the OTS is conducting.
Under the standards that the OTS is
incorporating into section 510.5, the
OTS will only release a SAR, or any
information that reveals the existence of
a SAR (referred to in this preamble as
1 74 FR 10145, 12 CFR 510.5, Release of
unpublished OTS information.
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‘‘SAR information’’), when ‘‘necessary to
fulfill official duties consistent with
Title II of the Bank Secrecy Act (BSA).’’
The effect of these amendments is that
the OTS will not release SAR
information in response to a request
from a private litigant arising out of a
civil lawsuit or administrative
proceeding to which the OTS is not a
party. The Director also will not
disclose SAR information to any other
person or entity, and the OTS will not
release SAR information in response to
a request by another government
agency, except to fulfill official duties in
light of the purposes of the BSA.
This final rule amends part 510 to
make it consistent with the amendments
to OTS’s SAR regulation that
implements section 351 of the USA
PATRIOT Act, thus ensuring that the
appropriate standard is applied to OTS’s
disclosure of SAR information. Section
510.5 sets forth OTS’s standards and
procedures for the release of
‘‘unpublished OTS information,’’ and
sets forth the restrictions on the
dissemination of such information.
Generally, ‘‘unpublished OTS
information’’ is confidential and
privileged information that is the
property of the OTS, and that the OTS
is not required to release under the
Freedom of Information Act (5 U.S.C.
552 et seq.) or that the OTS has not yet
published or made available pursuant to
12 U.S.C. 1818(u), the statute requiring
publication of certain enforcement
orders.
Section 510.5 describes procedures
for requesting unpublished OTS
information from the OTS, such as,
where to submit a request, the form of
the request, information that must be
included in any request involving an
adversarial matter, and various bases for
the OTS’s denial of such a request.2
Section 510.5 authorizes the OTS to
make unpublished OTS information
available to a supervised entity and to
other persons, at the sole discretion of
the Director or his or her delegate.3
Section 510.5(d)(5) also indicates that
the OTS may condition release of
information that it discloses under this
section.
Although a SAR may be considered
‘‘unpublished OTS information,’’ it is
the OTS’s position that the release of a
SAR must be governed by standards set
forth in the BSA. The BSA and its
implementing regulations require a
financial institution to file a SAR when
it detects a known or suspected
violation of Federal law or a suspicious
activity related to money laundering,
2 See
3 See
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12 CFR 510.5.
12 CFR 510.5(d).
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terrorist financing, or other criminal
activity.4 The BSA also provides that a
financial institution, and its officers,
directors, employees, and agents are
prohibited from notifying any person
involved in a suspicious transaction that
the transaction was reported.5 Most
importantly, in 2001, section 351 of the
USA PATRIOT Act added a new
provision to the BSA prohibiting
officers or employees of the Federal
government or any State, local, tribal, or
territorial government within the United
States from disclosing to any person 6
involved in a suspicious transaction that
the transaction was reported, other than
as necessary to fulfill the official duties
of such officer or employee.7
Accordingly, it is this provision that
now governs the ability of the OTS to
disclose SAR information to any person.
The OTS is revisiting the treatment of
SAR information in section 510.5 in
light of the 2001 amendments to the
BSA, added by section 351 of the USA
PATRIOT Act that specifically
addresses governmental disclosures of
SARs. Under the amendments to section
510.5, the OTS will decide whether to
release SAR information based upon the
standard in the OTS’s amendments to
its SAR rules, 12 CFR 563.180,
implementing section 351, thereby
replacing the factors previously set out
in section 510.5(d). The standard in the
amendments to the OTS’s SAR rule
provides that ‘‘Neither OTS (nor any
officer, employee or agent of OTS, shall
disclose a SAR, or any information that
will reveal the existence of a SAR
except as necessary to fulfill official
duties consistent with Title II of the
BSA.’’ In addition, the standard provides
that ‘‘official duties’’ shall not include
the disclosure of SAR information in
response to a request for use in a private
legal proceeding or in response to a
request for disclosure of non-public
information under 12 CFR 510.5.8 The
4 31
U.S.C. 5318(g)(1).
U.S.C. 5318(g)(2)(A)(i).
6 The phrase ‘‘any person involved in the
transaction’’ has been construed to apply to ‘‘any
person’’ because the disclosure of SAR information
to any outside party may make it likely that SAR
information would be disclosed to a person
involved in the transaction, which is absolutely
prohibited by the BSA. See Cotton v. Private Bank
and Trust Co., 235 F. Supp. 2d 809, 815 (N.D. Ill.
2002).
7 See USA PATRIOT Act, section 351(b). Pub. L
107–56, Title III, § 351, 115 Stat. 272, 321(2001).
8 For purposes of this provision ‘‘official duties’’
means official disclosures necessary to accomplish
a governmental purpose consistent with Title II of
the BSA entrusted to the agency, the officer or
employee. For example, prosecutorial disclosures
mandated by statute or the Constitution, such as a
statement of a government witness to be called at
trial, impeachment of a government witness, or
material exculpatory of a criminal defendant. See,
e.g., Giglio v. United States, 405 U.S. 150, 153–54
5 31
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Federal Register / Vol. 75, No. 232 / Friday, December 3, 2010 / Rules and Regulations
SAR rules interpret ‘‘official duties’’ to
mean ‘‘official duties consistent with the
purposes of Title II of the BSA,’’ namely,
for ‘‘criminal, tax, regulatory
investigations or proceedings, or in the
conduct of intelligence or
counterintelligence activities, including
analysis, to protect against international
terrorism.’’ 9 This standard will permit
disclosures responsive to a grand jury
subpoena; a request from an appropriate
Federal or State law enforcement or
regulatory agency; and prosecutorial
disclosures mandated by statute or the
Constitution, in connection with the
statement of a government witness to be
called at trial, the impeachment of a
government witness, or as material
exculpatory of a criminal defendant.10
B. Section-by-Section Description of the
Rule
emcdonald on DSK2BSOYB1PROD with RULES2
Section 510.5(a) and (b) Scope and
Purpose.
The existing section 510(b) includes
several standards for the release of
unpublished OTS information. A person
seeking such information, generally
must submit a request in writing to the
OTS that addresses the factors set forth
in section 510.5(b). Section 510.5(d)
describes how the OTS will make its
determination to release the
information. That provision also
provides that OTS will deny a request
if it deems the information to be (A) not
highly relevant, (B) privileged, (C)
available from other sources, or (D)
information that should not be disclosed
for reasons that warrant restriction
under the Federal Rules of Civil
Procedure.11
This final rule adds a new paragraph
(iv) to the scope section of 12 CFR
510.5, which states that this section
does not apply to OTS’s decision to
disclose records or testimony involving
a SAR filed pursuant to regulations
implementing 12 U.S.C. 5318(g) or any
information that will reveal the
existence of a SAR. Accordingly, the
OTS’s decision to disclose records or
testimony involving SAR information is
governed solely by the standard in 12
CFR 563.180. Paragraph (iv) makes clear
that the standard in 12 CFR 563.180
applies in place of the standards for
denial set forth in 12 CFR 510.5(d)(4).
Accordingly, the OTS will not release
(1972); Brady v. State of Maryland, 373 U.S. 83, 86–
87 (1963); Jencks v. United States, 353 U.S. 657, 668
(1957).
9 31 U.S.C. 5311 (setting forth the purposes of the
BSA).
10 See, e.g., Giglio v. United States, 405 U.S. 150,
153–54 (1972); Brady v. State of Maryland, 373 U.S.
83, 86–87 (1963); Jencks v. United States, 353 U.S.
657, 668 (1957).
11 See 12 CFR 510.5(d)(4).
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SAR information in response to any
request received pursuant to section
510.5, including from a federal, state, or
foreign government, and the Director
will not disclose SAR information to
any person, except to fulfill the OTS’s
official duties in light of the purposes of
the BSA. Consistent with the OTS’s
longstanding commitment to protect the
confidentiality of SARs, the SAR rule
also states that ‘‘official duties’’ does not
include the disclosure of SAR
information in response to a request for
use in a private legal proceeding or in
response to a request for disclosure of
non-public information under 12 CFR
510.5.
Section 510.5(d) Consideration of
requests.
Section 510.5 generally describes how
the OTS makes its determination to
release or to withhold unpublished OTS
information in response to requests
received under section 510.5(b) and
(d).12 Section 510.5(d)(4) specifically
lists four examples of reasons for which
the OTS will deny the release of
unpublished OTS information.
The OTS is adding ‘‘when not
prohibited by law’’ as a fifth reason for
denial of requests made under section
510.5(d)(4). This addition makes the
language in section 510.5(d), consistent
with the standard applicable to
disclosures to government entities,
which includes the condition that such
disclosures only be made ‘‘when not
prohibited by law.’’
III. Regulatory Analysis
Regulatory Flexibility Act
Under section 605(b) of the
Regulatory Flexibility Act (RFA), 5
U.S.C. 605(b), the regulatory flexibility
analysis otherwise required under
section 604 of the RFA is not required
if the agency certifies that the rule will
not have a significant economic impact
on a substantial number of small entities
and publishes its certification and a
short, explanatory statement in the
Federal Register along with its rule.
The OTS has determined that the rule
does not impose any economic costs as
they simply clarify the scope of the
statutory prohibition against the
disclosure by financial institutions and
by the government of SAR information.
Therefore, pursuant to section 605(b) of
the RFA, the OTS hereby certifies that
this rule will not have a significant
economic impact on a substantial
number of small entities. Accordingly, a
regulatory flexibility analysis is not
needed.
12 As described earlier, § 510.5 does not apply to
SAR information.
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Executive Order 12866
The OTS has determined that this rule
is not a significant regulatory action
under Executive Order 12866. We have
concluded that the changes that made
by the amendments will not have an
annual effect on the economy of $100
million or more. The OTS further
concludes that this rule does not meet
any of the other standards for a
significant regulatory action set forth in
Executive Order 12866.
Paperwork Reduction Act
We have reviewed the amendments in
accordance with the Paperwork
Reduction Act of 1995 (44 U.S.C. 3506;
5 CFR 1320, Appendix A.1) (PRA) and
have determined that they do not
contain any ‘‘collections of information’’
as defined by the PRA.
Unfunded Mandates Reform Act of 1995
Section 202 of the Unfunded
Mandates Reform Act of 1995, Public
Law 104–4 (UMRA) requires that an
agency prepare a budgetary impact
statement before promulgating a rule
that includes a Federal mandate that
may result in the expenditure by state,
local, and tribal governments, in the
aggregate, or by the private sector of
$100 million or more (adjusted annually
for inflation) in any one year. If a
budgetary impact statement is required,
section 205 of the UMRA also requires
an agency to identify and consider a
reasonable number of regulatory
alternatives before promulgating a rule.
The OTS has determined that its rule
will not result in expenditures by state,
local, and tribal governments, or by the
private sector, of $133 million or more.
Accordingly, OTS has not prepared a
budgetary impact statement or
specifically addressed the regulatory
alternatives considered.
List of Subjects in 12 CFR Part 510
Administrative practice and
procedure, Freedom of information,
Individuals with disabilities, Minority
businesses, Organization and functions
(Government agencies), Reporting and
recordkeeping requirements, Women.
Authority and Issuance
For the reasons set forth in the
preamble, part 510 of title 12 of the
Code of Federal Regulations is amended
as follows:
■
PART 510—MISCELLANEOUS
ORGANIZATIONAL REGULATIONS
1. The authority citation for part 510
continues to read as follows:
■
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Federal Register / Vol. 75, No. 232 / Friday, December 3, 2010 / Rules and Regulations
Authority: 12 U.S.C. 1462a, 1463, 1464;
Pub.L. 101–410, 104 Stat 890; Pub.L. 104–
134, 110 Stat 1321–358.
by the government of a SAR, as that
prohibition applies to the OTS’s
standards governing the disclosure of
■ 2. Amend § 510.5 by:
SARs; clarify that the exclusive standard
■ a. Removing, at the end of paragraph
applicable to the disclosure of a SAR, or
(a)(3)(ii), the word ‘‘and’’;
any information that would reveal the
■ b. Removing, at the end of paragraph
existence of a SAR, by the OTS is to
(a)(3)(iii), the period and adding ‘‘; and’’
fulfill official duties consistent with the
in its place;
purposes of the BSA; and modify the
■ c. Adding paragraph (a)(3)(iv) to read
safe harbor provision in the OTS’s SAR
as set forth below;
rules to include changes made by the
■ d. Removing, at the end of paragraph
Uniting and Strengthening America by
(d)(4)(i)(C), the word ‘‘or’’;
Providing Appropriate Tools Required
■ e. Removing, at the end of paragraph
to Intercept and Obstruct Terrorism
(d)(4)(i)(D) the period and adding ‘‘; and’’ (USA PATRIOT) Act. These
in its place; and
amendments are consistent with a final
■ f. Adding paragraph (d)(4)(i)(E) as set
rule being contemporaneously issued by
forth below.
the Financial Crimes Enforcement
Network (FinCEN) and the Office of
§ 510.5 Release of unpublished OTS
Comptroller of the Currency (OCC).
information.
DATES: This rule is effective on January
(a) * * *
3, 2011.
(3) * * *
(iv) Requests for a Suspicious Activity FOR FURTHER INFORMATION CONTACT:
Marvin Shaw, Senior Attorney,
Report (SAR), or any information that
Regulations and Legislation (202–906–
would reveal the existence of a SAR.
6639); Noelle Kurtin, Senior Attorney,
*
*
*
*
*
Enforcement (202–906–6739); or Stacy
(d) * * *
Messett, Senior Project Manager, BSA
(4) * * *
and Compliance Examinations (202–
(i) * * *
906–6241); Office of Thrift Supervision,
(E) Information that should not be
1700 G Street, NW., Washington, DC
disclosed, because such disclosure is
20552.
prohibited by law.
SUPPLEMENTARY INFORMATION:
*
*
*
*
*
I. Background
Dated: June 1, 2010.
By the Office of Thrift Supervision.
The BSA requires financial
institutions, including savings
John E. Bowman,
associations and service corporations
Acting Director.
regulated by the OTS, to keep certain
[FR Doc. 2010–29871 Filed 12–2–10; 8:45 am]
records and make certain reports that
BILLING CODE 6720–01–P
have been determined to be useful in
criminal, tax, or regulatory
investigations or proceedings, and for
DEPARTMENT OF THE TREASURY
intelligence or counter intelligence
activities to protect against international
Office of Thrift Supervision
terrorism. In particular, the BSA and its
implementing regulations require a
12 CFR Part 563
financial institution to file a SAR when
[Docket ID OTS–2010–0015]
it detects a known or suspected
violation of Federal law or a suspicious
RIN 1550–AC26
activity related to money laundering,
Confidentiality of Suspicious Activity
terrorist financing, or other criminal
Reports
activity.1
The Office of Thrift
Supervision, Treasury (OTS).
ACTION: Final rule.
AGENCY:
The OTS is issuing this final
rule to amend its regulations
implementing the Bank Secrecy Act
(BSA) governing the confidentiality of a
suspicious activity report (SAR) to:
Clarify the scope of the statutory
prohibition on the disclosure by a
financial institution of a SAR, as it
applies to savings associations and
service corporations; address the
statutory prohibition on the disclosure
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SUMMARY:
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1 The Annunzio-Wylie Anti-Money Laundering
Act of 1992 (the Annunzio-Wylie Act) amended the
BSA and authorized the Secretary of the Treasury
to require financial institutions to report suspicious
transactions relevant to a possible violation of law
or regulation. See Pub. L. 102–550, Title XV, section
1517(b), 106 Stat. 4055, 4058–9 (1992); 31 U.S.C.
5318(g)(1). The OTS, Board of Governors of the
Federal Reserve System (FRB), Federal Deposit
Insurance Corporation (FDIC), Office of the
Comptroller of the Currency (OCC), and National
Credit Union Administration (NCUA), (collectively
referred to as the Federal bank regulatory agencies)
subsequently issued virtually identical
implementing regulations on suspicious activity
reporting. See 12 CFR 21.11 (OCC); 12 CFR 208.62
(FRB); 12 CFR 353.3 (FDIC); 12 CFR 563.180 (OTS);
and 12 CFR 748.1 (NCUA).
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SARs are used for law enforcement or
regulatory purposes to combat terrorism,
terrorist financing, money laundering
and other financial crimes. For this
reason, the BSA provides that a
financial institution, and its officers,
directors, employees, and agents are
prohibited from notifying any person
involved in a suspicious transaction that
the transaction was reported.2 To
encourage the voluntary reporting of
possible violations of law and
regulation, and the filing of SARs, the
BSA also contains a safe harbor
provision, which shields financial
institutions making such reports from
civil liability.
FinCEN 3 has issued rules
implementing the SAR confidentiality
provisions for various types of financial
institutions that closely mirror the
statutory language.4 In addition, the
Federal bank regulatory agencies
implemented these provisions through
similar regulations that provide SARs
are confidential and generally no
information about or contained in a SAR
may be disclosed.5 The regulations
issued by FinCEN and the Federal bank
regulatory agencies also describe the
applicability of the safe harbor
provision to both voluntary reports of
possible and known violations of law
and the required filing of SARs.6
The USA PATRIOT Act of 2001
strengthened the confidentiality of SARs
by adding to the BSA a new provision
that prohibits officers or employees of
the Federal Government or any State,
local, tribal, or territorial government
within the United States with
knowledge of a SAR, from disclosing to
any person involved in a suspicious
transaction that the transaction was
reported, other than as necessary to
fulfill the official duties of such officer
or employee.7 The USA PATRIOT Act
also clarified that the safe harbor
shielding financial institutions from
liability covers voluntary disclosures of
possible violations of law and
regulations to a government agency and
expanded the scope of the limit on
liability to cover any civil liability that
2 31
U.S.C. 5318(g)(2)(A)(i).
is the agency designated by the
Department of the Treasury to administer the BSA,
and with which SARs must be filed. See 31 U.S.C.
5318; 12 CFR 21.11(c).
4 See, e.g., 31 CFR 103.18(e) (SAR confidentiality
rule for banks); 31 CFR 103.19(e) (SAR
confidentiality rule for brokers or dealers in
securities).
5 See 12 CFR 21.11(k) (OCC); 12 CFR 208.62(j)
(FRB); 12 CFR 353.3(g) (FDIC); 12 CFR
563.180(d)(12) (OTS); and 12 CFR 748.1 (NCUA).
6 31 U.S.C. 5318(q)(3).
7 See USA PATRIOT Act, section 351(b), Pub. L.
107–56, Title III, section 351, 115 Stat. 272, 321
(2001); 31 U.S.C. 5318(g)(2).
3 FinCEN
E:\FR\FM\03DER2.SGM
03DER2
]]>Agencies
[Federal Register Volume 75, Number 232 (Friday, December 3, 2010)]
[Rules and Regulations]
[Pages 75583-75586]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-29871]
=======================================================================
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DEPARTMENT OF THE TREASURY
Office of Thrift Supervision
12 CFR Part 510
[Docket ID OTS-2010-0016]
RIN 1550-AC28
Standards Governing the Release of a Suspicious Activity Report
AGENCY: Office of Thrift Supervision, Treasury.
[[Page 75584]]
ACTION: Final rule.
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SUMMARY: The Office of Thrift Supervision (OTS) is revising its
regulations governing the release of unpublished OTS information. The
primary change clarifies that the OTS's decision to release a
Suspicious Activity Report (SAR) is governed by the standards set forth
in amendments to the OTS's SAR regulation that are part of a separate,
but simultaneous, rulemaking.
DATES: The final rule is effective January 3, 2011.
FOR FURTHER INFORMATION CONTACT: Marvin Shaw, Senior Attorney,
Regulations and Legislation (202-906-6639); Dirk Roberts, Deputy Chief
Counsel, Litigation (202-906-7631), Office of Thrift Supervision, 1700
G Street, NW., Washington, DC 20552.
SUPPLEMENTARY INFORMATION:
I. Introduction
On March 9, 2009, the Office of Thrift Supervision (OTS) issued a
notice of proposed rulemaking to revise its regulations governing the
release of unpublished OTS information.\1\ The proposal was intended to
clarify that OTS's decision to release a Suspicious Activity Report
(SAR) would be governed by the standards set forth in proposed
amendments to OTS's SARS regulation at 12 CFR 563.180, Suspicious
Activity Reports and other reports and statements, that were part of a
separate, but simultaneous rulemaking.
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\1\ 74 FR 10145, 12 CFR 510.5, Release of unpublished OTS
information.
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OTS received no comments to the proposed amendments to section
510.5, although the agency did receive comments to the proposed
amendments to section 563.180. Those comments are addressed in the part
563 final rule published elsewhere in today's Federal Register.
II. Final Rule
A. Overview
OTS is amending its regulations set forth in 12 CFR part 510,
governing the release of unpublished OTS information. First, the
amendments conform section 510.5 to amendments to the OTS's SAR
confidentiality rule, 12 CFR 563.180 that are being adopted as part of
a separate, but simultaneous, rulemaking that the OTS is conducting.
Under the standards that the OTS is incorporating into section 510.5,
the OTS will only release a SAR, or any information that reveals the
existence of a SAR (referred to in this preamble as ``SAR
information''), when ``necessary to fulfill official duties consistent
with Title II of the Bank Secrecy Act (BSA).''
The effect of these amendments is that the OTS will not release SAR
information in response to a request from a private litigant arising
out of a civil lawsuit or administrative proceeding to which the OTS is
not a party. The Director also will not disclose SAR information to any
other person or entity, and the OTS will not release SAR information in
response to a request by another government agency, except to fulfill
official duties in light of the purposes of the BSA.
This final rule amends part 510 to make it consistent with the
amendments to OTS's SAR regulation that implements section 351 of the
USA PATRIOT Act, thus ensuring that the appropriate standard is applied
to OTS's disclosure of SAR information. Section 510.5 sets forth OTS's
standards and procedures for the release of ``unpublished OTS
information,'' and sets forth the restrictions on the dissemination of
such information. Generally, ``unpublished OTS information'' is
confidential and privileged information that is the property of the
OTS, and that the OTS is not required to release under the Freedom of
Information Act (5 U.S.C. 552 et seq.) or that the OTS has not yet
published or made available pursuant to 12 U.S.C. 1818(u), the statute
requiring publication of certain enforcement orders.
Section 510.5 describes procedures for requesting unpublished OTS
information from the OTS, such as, where to submit a request, the form
of the request, information that must be included in any request
involving an adversarial matter, and various bases for the OTS's denial
of such a request.\2\ Section 510.5 authorizes the OTS to make
unpublished OTS information available to a supervised entity and to
other persons, at the sole discretion of the Director or his or her
delegate.\3\ Section 510.5(d)(5) also indicates that the OTS may
condition release of information that it discloses under this section.
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\2\ See 12 CFR 510.5.
\3\ See 12 CFR 510.5(d).
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Although a SAR may be considered ``unpublished OTS information,''
it is the OTS's position that the release of a SAR must be governed by
standards set forth in the BSA. The BSA and its implementing
regulations require a financial institution to file a SAR when it
detects a known or suspected violation of Federal law or a suspicious
activity related to money laundering, terrorist financing, or other
criminal activity.\4\ The BSA also provides that a financial
institution, and its officers, directors, employees, and agents are
prohibited from notifying any person involved in a suspicious
transaction that the transaction was reported.\5\ Most importantly, in
2001, section 351 of the USA PATRIOT Act added a new provision to the
BSA prohibiting officers or employees of the Federal government or any
State, local, tribal, or territorial government within the United
States from disclosing to any person \6\ involved in a suspicious
transaction that the transaction was reported, other than as necessary
to fulfill the official duties of such officer or employee.\7\
Accordingly, it is this provision that now governs the ability of the
OTS to disclose SAR information to any person.
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\4\ 31 U.S.C. 5318(g)(1).
\5\ 31 U.S.C. 5318(g)(2)(A)(i).
\6\ The phrase ``any person involved in the transaction'' has
been construed to apply to ``any person'' because the disclosure of
SAR information to any outside party may make it likely that SAR
information would be disclosed to a person involved in the
transaction, which is absolutely prohibited by the BSA. See Cotton
v. Private Bank and Trust Co., 235 F. Supp. 2d 809, 815 (N.D. Ill.
2002).
\7\ See USA PATRIOT Act, section 351(b). Pub. L 107-56, Title
III, Sec. 351, 115 Stat. 272, 321(2001).
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The OTS is revisiting the treatment of SAR information in section
510.5 in light of the 2001 amendments to the BSA, added by section 351
of the USA PATRIOT Act that specifically addresses governmental
disclosures of SARs. Under the amendments to section 510.5, the OTS
will decide whether to release SAR information based upon the standard
in the OTS's amendments to its SAR rules, 12 CFR 563.180, implementing
section 351, thereby replacing the factors previously set out in
section 510.5(d). The standard in the amendments to the OTS's SAR rule
provides that ``Neither OTS (nor any officer, employee or agent of OTS,
shall disclose a SAR, or any information that will reveal the existence
of a SAR except as necessary to fulfill official duties consistent with
Title II of the BSA.'' In addition, the standard provides that
``official duties'' shall not include the disclosure of SAR information
in response to a request for use in a private legal proceeding or in
response to a request for disclosure of non-public information under 12
CFR 510.5.\8\ The
[[Page 75585]]
SAR rules interpret ``official duties'' to mean ``official duties
consistent with the purposes of Title II of the BSA,'' namely, for
``criminal, tax, regulatory investigations or proceedings, or in the
conduct of intelligence or counterintelligence activities, including
analysis, to protect against international terrorism.'' \9\ This
standard will permit disclosures responsive to a grand jury subpoena; a
request from an appropriate Federal or State law enforcement or
regulatory agency; and prosecutorial disclosures mandated by statute or
the Constitution, in connection with the statement of a government
witness to be called at trial, the impeachment of a government witness,
or as material exculpatory of a criminal defendant.\10\
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\8\ For purposes of this provision ``official duties'' means
official disclosures necessary to accomplish a governmental purpose
consistent with Title II of the BSA entrusted to the agency, the
officer or employee. For example, prosecutorial disclosures mandated
by statute or the Constitution, such as a statement of a government
witness to be called at trial, impeachment of a government witness,
or material exculpatory of a criminal defendant. See, e.g., Giglio
v. United States, 405 U.S. 150, 153-54 (1972); Brady v. State of
Maryland, 373 U.S. 83, 86-87 (1963); Jencks v. United States, 353
U.S. 657, 668 (1957).
\9\ 31 U.S.C. 5311 (setting forth the purposes of the BSA).
\10\ See, e.g., Giglio v. United States, 405 U.S. 150, 153-54
(1972); Brady v. State of Maryland, 373 U.S. 83, 86-87 (1963);
Jencks v. United States, 353 U.S. 657, 668 (1957).
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B. Section-by-Section Description of the Rule
Section 510.5(a) and (b) Scope and Purpose.
The existing section 510(b) includes several standards for the
release of unpublished OTS information. A person seeking such
information, generally must submit a request in writing to the OTS that
addresses the factors set forth in section 510.5(b). Section 510.5(d)
describes how the OTS will make its determination to release the
information. That provision also provides that OTS will deny a request
if it deems the information to be (A) not highly relevant, (B)
privileged, (C) available from other sources, or (D) information that
should not be disclosed for reasons that warrant restriction under the
Federal Rules of Civil Procedure.\11\
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\11\ See 12 CFR 510.5(d)(4).
---------------------------------------------------------------------------
This final rule adds a new paragraph (iv) to the scope section of
12 CFR 510.5, which states that this section does not apply to OTS's
decision to disclose records or testimony involving a SAR filed
pursuant to regulations implementing 12 U.S.C. 5318(g) or any
information that will reveal the existence of a SAR. Accordingly, the
OTS's decision to disclose records or testimony involving SAR
information is governed solely by the standard in 12 CFR 563.180.
Paragraph (iv) makes clear that the standard in 12 CFR 563.180 applies
in place of the standards for denial set forth in 12 CFR 510.5(d)(4).
Accordingly, the OTS will not release SAR information in response to
any request received pursuant to section 510.5, including from a
federal, state, or foreign government, and the Director will not
disclose SAR information to any person, except to fulfill the OTS's
official duties in light of the purposes of the BSA. Consistent with
the OTS's longstanding commitment to protect the confidentiality of
SARs, the SAR rule also states that ``official duties'' does not
include the disclosure of SAR information in response to a request for
use in a private legal proceeding or in response to a request for
disclosure of non-public information under 12 CFR 510.5.
Section 510.5(d) Consideration of requests.
Section 510.5 generally describes how the OTS makes its
determination to release or to withhold unpublished OTS information in
response to requests received under section 510.5(b) and (d).\12\
Section 510.5(d)(4) specifically lists four examples of reasons for
which the OTS will deny the release of unpublished OTS information.
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\12\ As described earlier, Sec. 510.5 does not apply to SAR
information.
---------------------------------------------------------------------------
The OTS is adding ``when not prohibited by law'' as a fifth reason
for denial of requests made under section 510.5(d)(4). This addition
makes the language in section 510.5(d), consistent with the standard
applicable to disclosures to government entities, which includes the
condition that such disclosures only be made ``when not prohibited by
law.''
III. Regulatory Analysis
Regulatory Flexibility Act
Under section 605(b) of the Regulatory Flexibility Act (RFA), 5
U.S.C. 605(b), the regulatory flexibility analysis otherwise required
under section 604 of the RFA is not required if the agency certifies
that the rule will not have a significant economic impact on a
substantial number of small entities and publishes its certification
and a short, explanatory statement in the Federal Register along with
its rule.
The OTS has determined that the rule does not impose any economic
costs as they simply clarify the scope of the statutory prohibition
against the disclosure by financial institutions and by the government
of SAR information. Therefore, pursuant to section 605(b) of the RFA,
the OTS hereby certifies that this rule will not have a significant
economic impact on a substantial number of small entities. Accordingly,
a regulatory flexibility analysis is not needed.
Executive Order 12866
The OTS has determined that this rule is not a significant
regulatory action under Executive Order 12866. We have concluded that
the changes that made by the amendments will not have an annual effect
on the economy of $100 million or more. The OTS further concludes that
this rule does not meet any of the other standards for a significant
regulatory action set forth in Executive Order 12866.
Paperwork Reduction Act
We have reviewed the amendments in accordance with the Paperwork
Reduction Act of 1995 (44 U.S.C. 3506; 5 CFR 1320, Appendix A.1) (PRA)
and have determined that they do not contain any ``collections of
information'' as defined by the PRA.
Unfunded Mandates Reform Act of 1995
Section 202 of the Unfunded Mandates Reform Act of 1995, Public Law
104-4 (UMRA) requires that an agency prepare a budgetary impact
statement before promulgating a rule that includes a Federal mandate
that may result in the expenditure by state, local, and tribal
governments, in the aggregate, or by the private sector of $100 million
or more (adjusted annually for inflation) in any one year. If a
budgetary impact statement is required, section 205 of the UMRA also
requires an agency to identify and consider a reasonable number of
regulatory alternatives before promulgating a rule. The OTS has
determined that its rule will not result in expenditures by state,
local, and tribal governments, or by the private sector, of $133
million or more. Accordingly, OTS has not prepared a budgetary impact
statement or specifically addressed the regulatory alternatives
considered.
List of Subjects in 12 CFR Part 510
Administrative practice and procedure, Freedom of information,
Individuals with disabilities, Minority businesses, Organization and
functions (Government agencies), Reporting and recordkeeping
requirements, Women.
Authority and Issuance
0
For the reasons set forth in the preamble, part 510 of title 12 of the
Code of Federal Regulations is amended as follows:
PART 510--MISCELLANEOUS ORGANIZATIONAL REGULATIONS
0
1. The authority citation for part 510 continues to read as follows:
[[Page 75586]]
Authority: 12 U.S.C. 1462a, 1463, 1464; Pub.L. 101-410, 104
Stat 890; Pub.L. 104-134, 110 Stat 1321-358.
0
2. Amend Sec. 510.5 by:
0
a. Removing, at the end of paragraph (a)(3)(ii), the word ``and'';
0
b. Removing, at the end of paragraph (a)(3)(iii), the period and adding
``; and'' in its place;
0
c. Adding paragraph (a)(3)(iv) to read as set forth below;
0
d. Removing, at the end of paragraph (d)(4)(i)(C), the word ``or'';
0
e. Removing, at the end of paragraph (d)(4)(i)(D) the period and adding
``; and'' in its place; and
0
f. Adding paragraph (d)(4)(i)(E) as set forth below.
Sec. 510.5 Release of unpublished OTS information.
(a) * * *
(3) * * *
(iv) Requests for a Suspicious Activity Report (SAR), or any
information that would reveal the existence of a SAR.
* * * * *
(d) * * *
(4) * * *
(i) * * *
(E) Information that should not be disclosed, because such
disclosure is prohibited by law.
* * * * *
Dated: June 1, 2010.
By the Office of Thrift Supervision.
John E. Bowman,
Acting Director.
[FR Doc. 2010-29871 Filed 12-2-10; 8:45 am]
BILLING CODE 6720-01-P
