Standards Governing the Release of a Suspicious Activity Report, 75574-75576 [2010-29883]

Agencies

• Office of the Comptroller of the Currency
• DEPARTMENT OF THE TREASURY
• Comptroller of the Currency

[Federal Register Volume 75, Number 232 (Friday, December 3, 2010)]
[Rules and Regulations]
[Pages 75574-75576]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-29883]



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Part III





Department of the Treasury





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Comptroller of the Currency



12 CFR Parts 4 and 21



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Office of Thrift Supervision

12 CFR Parts 510 and 563



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31 CFR Part 103



Standards Governing the Release of a Suspicious Activity Report; 
Confidentiality of Suspicious Activity Reports; Final Rule

Federal Register / Vol. 75, No. 232 / Friday, December 3, 2010 / 
Rules and Regulations

[[Page 75574]]


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DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

12 CFR Part 4

[Docket ID OCC-2010-0018]
RIN 1557-AD16


Standards Governing the Release of a Suspicious Activity Report

AGENCY: Office of the Comptroller of the Currency, Treasury.

ACTION: Final rule.

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SUMMARY: The Office of the Comptroller of the Currency (OCC) is 
revising its regulations governing the release of non-public OCC 
information. The primary change clarifies that the OCC's decision to 
release a suspicious activity report (SAR) will be governed by the 
standards set forth in amendments to the OCC's SAR regulation that is 
part of a separate final rule published today in the Federal Register.

DATES: This rule is effective on January 3, 2011.

FOR FURTHER INFORMATION CONTACT: James Vivenzio, Senior Counsel for 
BSA/AML, (202) 874-5200; Ellen Warwick, Assistant Director, Litigation, 
(202) 874-5280; or Patrick Tierney, Counsel, Legislative and Regulatory 
Activities, (202) 874-5090; Office of the Comptroller of the Currency, 
250 E Street, SW., Washington, DC 20219.

SUPPLEMENTARY INFORMATION:

I. Introduction

    The OCC is amending its regulations set forth in 12 CFR part 4, 
subpart C, governing the release of non-public OCC information. First, 
the amendments conform subpart C to amendments to the OCC's SAR 
confidentiality rule, 12 CFR 21.11(k), that are being issued as part of 
a separate, but simultaneous, rulemaking that the OCC is conducting 
together with the Financial Crimes Enforcement Network (FinCEN) and is 
published elsewhere in this issue of the Federal Register. Under the 
standards that the OCC is incorporating into part 4, the OCC will 
release a SAR, or any information that would reveal the existence of a 
SAR (referred to in this SUPPLEMENTARY INFORMATION as ``SAR 
information'') only when necessary to fulfill official duties 
consistent with Title II of the Bank Secrecy Act (BSA). The standards 
also state that ``official duties'' do 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 OCC 
information under Sec.  4.33. Thus, one effect of these amendments is 
that the OCC will not release SAR information in response to a request 
from a private litigant arising out of a private legal proceeding.
    In addition to the clarification of the standards governing the 
release of SAR information, the amendments to subpart C also clarify 
that the OCC will deny a request for non-public information made under 
12 CFR 4.33, if the release is prohibited by law. Finally, the 
amendments include a technical correction to Sec.  4.37 that is 
described in section IV of this SUPPLEMENTARY INFORMATION.

II. Background

    As described in greater detail below, this final rule amends part 4 
to make subpart C consistent with the amendments to the OCC's SAR 
regulation that implement section 351 of the USA PATRIOT Act to ensure 
that the appropriate standard is applied to the OCC's disclosure of SAR 
information.\1\ 12 CFR part 4, subpart C, contains the OCC's standards 
and procedures for the release of ``non-public OCC information'' and 
sets forth the restrictions on the dissemination of such information. 
Generally, ``non-public OCC information'' is confidential and 
privileged information that is the property of the OCC and that the OCC 
is not required to release under the Freedom of Information Act (5 
U.S.C. 552 et seq.) or that the OCC has not yet published or made 
available pursuant to 12 U.S.C. 1818(u), the statute requiring 
publication of certain enforcement actions. Examples in subpart C of 
``non-public OCC information'' currently include ``a SAR filed by the 
OCC, a national bank, or a Federal branch or agency of a foreign bank 
licensed or chartered by the OCC under 12 CFR 21.11.'' \2\
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    \1\ USA PATRIOT Act, section 351(b); Pub. L. 107-56, Title III, 
section 351; 115 Stat. 272, 320-21 (2001); 31 U.S.C. 5318(g)(2).
    \2\ See 12 CFR 4.32(b)(1)(vii).
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    Subpart C generally describes procedures for requesting non-public 
OCC information from the OCC, 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 OCC's denial 
of such a request.\3\ Subpart C also authorizes the OCC to make non-
public OCC information available to a supervised entity and to other 
persons, at the sole discretion of the Comptroller, without a request 
for records or testimony,\4\ and sets forth the OCC's policy regarding 
the release of non-public OCC information to other government agencies 
in response to a request.\5\ Subpart C also describes the conditions 
and limitations that the OCC may place on information it discloses 
under subpart C.
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    \3\ See 12 CFR 4.33-4.35.
    \4\ See 12 CFR 4.36.
    \5\ See 12 CFR 4.37(c).
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    Although SARs fall within the definition of ``non-public OCC 
information,'' the release of a SAR is 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.\6\ 
SARs generally are unsubstantiated reports of possible violations of 
law or of suspicious activities that are used for law enforcement or 
regulatory purposes. 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.\7\ More 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 \8\ involved in a suspicious transaction that 
the transaction was reported, other than as necessary to fulfill the 
official duties of such officer or employee.\9\ Accordingly, it is this 
provision that now governs the ability of the OCC to disclose SAR 
information to any person.
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    \6\ See 31 U.S.C. 5318(g)(1).
    \7\ 31 U.S.C. 5318(g)(2)(A)(i).
    \8\ 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 expressly prohibited by the BSA. See Cotton v. 
Private Bank and Trust Co., 235 F. Supp. 2d 809, 815 (N.D. Ill. 
2002).
    \9\ 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).
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    To implement this provision, this final rule amends subpart C to 
provide that the OCC will not, and an officer, employee or agent of the 
OCC, shall not, disclose SAR information except as necessary to fulfill 
official duties consistent with Title II of the BSA. The final rule 
further provides that the OCC will decide whether to release SAR 
information based upon the standard in its SAR rules, 12 CFR 21.11(k), 
implementing section 351, rather than

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upon any of the factors set out in subpart C.\10\
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    \10\ See, e.g., 12 CFR 4.35.
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    In addition, the final part 21 rule 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 OCC information 
under Sec.  4.33. The final part 21 SAR rule interprets ``official 
duties'' as ``official duties consistent with Title II of the Bank 
Secrecy Act,'' meaning official disclosures necessary to accomplish a 
governmental purpose entrusted to the agency, the officer, or employee, 
consistent with Title II of the BSA.\11\ This standard permits, for 
example, disclosures responsive to a grand jury subpoena; a request 
from an appropriate Federal or State law enforcement agency; a request 
from an appropriate Congressional committee or subcommittee; 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.\12\
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    \11\ 31 U.S.C. 5311 (setting forth the purposes of the BSA).
    \12\ See, e.g., Giglio v. United States, 405 U.S. 150, 153-54 
(1972); Brady v. Maryland, 373 U.S. 83, 86-87 (1963); Jencks v. 
United States, 353 U.S. 657, 668 (1957).
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III. Notice of Proposed Rulemaking

    On March 9, 2009, the OCC published a notice of proposed rulemaking 
to amend its regulations set forth in 12 CFR part 4, subpart C, 
governing the release of non-public OCC information.\13\ The OCC 
received no public comment on the part 4 proposal.\14\ The proposed 
rule is adopted as final without change and is described in detail in 
the Section-by-Section Analysis section.
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    \13\ 74 FR 10136 (Mar. 9, 2009).
    \14\ However, the OCC received comments on proposed changes to 
the part 21 SAR rules, which are discussed in the SUPPLEMENTARY 
INFORMATION section of the OCC's part 21 final SAR rule published 
today in the Federal Register.
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IV. Section-by-Section Analysis of the Final Rule

Section 4.31(b)(4) Purpose and Scope

    Subpart C currently includes several standards for the release of 
non-public OCC information. A person seeking non-public OCC information 
generally must submit a request in writing to the OCC that addresses 
the factors set forth in Sec.  4.33. Section 4.35 describes how the OCC 
will make its determination to release the information and contains an 
illustrative list of possible bases for denial of a request.\15\ 
Section 4.36(a) provides that the OCC may release information to a 
supervised entity or any person, even without a request, at the 
discretion of the Comptroller when necessary or appropriate. In 
addition, the scope section of subpart C makes clear that Sec.  4.37(c) 
applies to requests for non-public OCC information from Federal and 
foreign governments and State agencies with authority to investigate 
violations of criminal law and State bank regulatory agencies.\16\ 
Section 4.37(c) states that, when not prohibited by law, the 
Comptroller may make non-public OCC information available to these 
governmental entities for their use when necessary in the performance 
of their official duties.
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    \15\ See 12 CFR 4.35(a)(2).
    \16\ See 12 CFR 4.31(b)(3).
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    This final rule adds a new paragraph (b)(4) to 12 CFR 4.31, the 
scope section of subpart C, which states that the OCC's decision to 
disclose records or testimony involving SAR information for purposes of 
12 CFR 4.35(a)(1), 4.36(a), and 4.37(c), is governed by the standard in 
12 CFR 21.11(k). Accordingly, the Comptroller's discretion to disclose 
SAR information to any person or entity without a request under Sec.  
4.36, and the OCC's determination to disclose SAR information to 
another government agency under Sec.  4.37, will be subject to the 
standard in the amendments to 12 CFR 21.11(k) prohibiting the 
disclosure of SAR information ``except as necessary to fulfill official 
duties consistent with Title II of the Bank Secrecy Act.'' \17\ In 
accordance with the OCC's longstanding commitment to protect the 
confidentiality of SARs, section 21.11(k) also provides 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 Sec.  4.33.\18\
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    \17\ See 12 CFR 21.11(k)(2).
    \18\ Id.
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Section 4.32(b) Definition of Non-Public OCC Information

    This final rule amends the definition of ``non-public OCC 
information'' in Sec.  4.32(b) to remove the reference to ``a SAR filed 
by the OCC, a national bank, or a Federal branch or agency of a foreign 
bank licensed or chartered by the OCC under 12 CFR 21.11'' from the 
illustrative list of examples that follow the definition of ``non-
public OCC information.'' SAR information is still covered by the 
definition of ``non-public OCC information.'' However, the OCC is 
removing the reference to SARs from the illustrative list because 
highlighting SAR information as an example of non-public OCC 
information would be misleading in light of the amendments to Sec.  
4.31 described in the previous section. As described earlier, under the 
amendments to subpart C, SAR information will be treated as a unique 
subset of non-public OCC information subject to release in accordance 
with the standards set forth in 12 CFR 21.11(k).
    Notwithstanding the OCC's deletion of the specific reference to 
SARs as an example of ``non-public OCC information,'' SAR information 
continues to be otherwise subject to the provisions of subpart C that 
are not superseded by the standards in revised part 21. For example, 
Sec.  4.37(d), which generally provides that the possession by a person 
of non-public OCC information does not constitute a waiver by the OCC 
of its right to control, or impose limitations on, the use and 
dissemination of the information, continues to apply to SAR 
information.

Section 4.35(a)(2) Consideration of Requests

    Section 4.35 generally describes how the OCC makes its 
determination to release or to withhold non-public OCC information in 
response to requests received under Sec.  4.33. Section 4.35(a)(2) 
lists five examples of reasons for which the OCC will deny the release 
of non-public OCC information.
    The final rule adds ``when prohibited by law'' as a sixth example 
of a reason for denial of requests made under Sec.  4.35. This addition 
clarifies that the OCC may deny a request under Sec.  4.33 when 
prohibited by law, including, for example, Sec.  21.11(k).

Section 4.37(c) Disclosures to Government Agencies

    The final rule also makes a technical correction to Sec.  4.37(c). 
Section 4.37(c) describes the basis for disclosures of non-public OCC 
information to government agencies. The last sentence in Sec.  4.37(c) 
also states that any information that is made available under this 
section is OCC property, and the OCC may condition its use on 
appropriate confidentiality protections, ``including the mechanisms 
identified in Sec.  4.37.'' However, the various mechanisms that 
provide confidentiality protections are identified in Sec.  4.38 of 
subpart C, rather than in Sec.  4.37. Therefore, the final rule 
replaces the reference to ``Sec.  4.37'' with a reference to ``Sec.  
4.38.''

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V. OCC Regulatory Analysis

Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) generally requires an agency 
that is issuing a final rule to prepare and make available a final 
regulatory flexibility analysis that describes the impact of the final 
rule on small entities, 5 U.S.C. 604. However, the RFA provides that an 
agency is not required to prepare and make available a final regulatory 
flexibility analysis if the agency certifies that the final 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 final rule. 5 U.S.C. 
605(b). For purposes of the RFA and OCC-regulated entities, a ``small 
entity'' is a national bank with assets of $175 million or less (small 
national bank).
    The OCC has determined that this final rule will not have a 
significant economic impact on a substantial number of small entities. 
The final rule's changes to the OCC's internal standards, which were 
prompted by a statutory change, apply to the OCC, and its internal 
deliberations regarding the agency's ability to disclose a SAR, and not 
to any other entities. Therefore, pursuant to section 605(b) of the 
RFA, the OCC certifies that this final rule will not have a significant 
economic impact on a substantial number of small entities. Accordingly, 
the requirement to prepare and publish a final regulatory flexibility 
analysis does not apply to this final rule.

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 the final rule 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 (adjusted for 
inflation) 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, which amends the 
standards the OCC will apply when determining whether to release a SAR, 
will not result in expenditures by State, local, and tribal 
governments, or by the private sector, of $100 million or more 
(adjusted for inflation) in any one year. Accordingly, this final rule 
is not subject to section 202 of the Unfunded Mandates Act.

List of Subjects in 12 CFR Part 4

    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 4, subpart C, of title 
12 of the Code of Federal Regulations is amended as follows:

PART 4--ORGANIZATION AND FUNCTIONS, AVAILABILITY AND RELEASE OF 
INFORMATION, CONTRACTING OUTREACH PROGRAM, POST-EMPLOYMENT 
RESTRICTIONS FOR SENIOR EXAMINERS

0
1. Revise the authority citation for part 4 to read as follows:

    Authority: 12 U.S.C. 93a. Subpart A also issued under 5 U.S.C. 
552. Subpart B also issued under 5 U.S.C. 552; E.O. 12600 (3 CFR 
1987 Comp., p. 235). Subpart C also issued under 5 U.S.C. 301, 552; 
12 U.S.C. 161, 481, 482, 484(a), 1442, 1817(a)(2) and (3), 1818(u) 
and (v), 1820(d)(6), 1820(k), 1821(c), 1821(o), 1821(t), 1831m, 
1831p-1, 1831o, 1867, 1951 et seq., 2601 et seq., 2801 et seq., 2901 
et seq., 3101 et seq., 3401 et seq.; 15 U.S.C. 77uu(b), 78q(c)(3); 
18 U.S.C. 641, 1905, 1906; 29 U.S.C. 1204; 31 U.S.C. 5318(g)(2), 
9701; 42 U.S.C. 3601; 44 U.S.C. 3506, 3510. Subpart D also issued 
under 12 U.S.C. 1833e.


0
2. Add Sec.  4.31(b)(4) to read as follows:


Sec.  4.31  Purpose and scope.

* * * * *
    (b) * * *
    (4) For purposes of Sec. Sec.  4.35(a)(1), 4.36(a) and 4.37(c) of 
this part, the OCC's decision to disclose records or testimony 
involving a Suspicious Activity Report (SAR) filed pursuant to the 
regulations implementing 12 U.S.C. 5318(g), or any information that 
would reveal the existence of a SAR, is governed by 12 CFR 21.11(k).


Sec.  4.32  [Amended]

0
3. Amend Sec.  4.32(b) by:
0
a. Removing paragraph (b)(1)(vii).
0
b. Adding the word ``and'' at the end of paragraph (b)(1)(v); and

0
c. Removing, at the end of paragraph (b)(1)(vi), ``; and'' and adding a 
period in its place.

0
4. Amend Sec.  4.35(a)(2) by:
0
a. Removing the word ``or'' at the end of paragraph (a)(2)(iv);
0
b. Removing, in paragraph (a)(2)(v), the period and by adding in lieu 
thereof ``; or''; and
0
c. Adding a new paragraph (a)(2)(vi) to read as follows:


Sec.  4.35  Consideration of requests.

    (a) * * *
    (2) * * *
    (vi) When prohibited by law.
* * * * *


Sec.  4.37  [Amended]

0
5. In Sec.  4.37(c), remove the reference to ``Sec.  4.37'' in the last 
sentence and add in lieu thereof ``Sec.  4.38.''

[This Signature Page Relates to the Final Rule on Standards Governing 
the Release of a Suspicious Activity Report--Part 4.]

    Dated: August 16, 2010.
John Walsh,
Acting Comptroller of the Currency.
[FR Doc. 2010-29883 Filed 12-2-10; 8:45 am]
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