Exemptions to Suspicious Activity Report Requirements, 6572-6576 [2021-00034]

Download as PDF 6572 Proposed Rules Federal Register Vol. 86, No. 13 Friday, January 22, 2021 This section of the FEDERAL REGISTER contains notices to the public of the proposed issuance of rules and regulations. The purpose of these notices is to give interested persons an opportunity to participate in the rule making prior to the adoption of the final rules. DEPARTMENT OF THE TREASURY Office of the Comptroller of the Currency 12 CFR Parts 21 and 163 [Docket No. OCC–2020–0037] RIN 1557–AE77 Exemptions to Suspicious Activity Report Requirements Office of the Comptroller of the Currency (OCC), Treasury (USDT). ACTION: Notice of proposed rulemaking with request for public comment. AGENCY: The OCC is inviting comment on a proposed rule that would modify the requirements for national banks and federal savings associations to file Suspicious Activity Reports. The proposed rule would amend the OCC’s Suspicious Activity Report regulations to allow the OCC to issue exemptions from the requirements of those regulations. The proposed rule makes it possible for the OCC to grant relief to national banks or federal savings associations that develop innovative solutions intended to meet Bank Secrecy Act requirements more efficiently and effectively. DATES: Comments must be received by February 22, 2021. ADDRESSES: Commenters are encouraged to submit comments through the Federal eRulemaking Portal, if possible. Please use the title ‘‘Exemptions to Suspicious Activity Report Requirements’’ to facilitate the organization and distribution of the comments. You may submit comments by any of the following methods: • Federal eRulemaking Portal— Regulations.gov Classic or Regulations.gov Beta: Regulations.gov Classic: Go to https:// www.regulations.gov/. Enter ‘‘Docket ID OCC–2020–0037’’ in the Search Box and click ‘‘Search.’’ Click on ‘‘Comment Now’’ to submit public comments. For help with submitting effective comments please click on ‘‘View jbell on DSKJLSW7X2PROD with PROPOSALS SUMMARY: VerDate Sep<11>2014 16:14 Jan 21, 2021 Jkt 253001 Commenter’s Checklist.’’ Click on the ‘‘Help’’ tab on the Regulations.gov home page to get information on using Regulations.gov, including instructions for submitting public comments. Regulations.gov Beta: Go to https:// beta.regulations.gov/ or click ‘‘Visit New Regulations.gov Site’’ from the Regulations.gov Classic homepage. Enter ‘‘Docket ID OCC–2020–0037’’ in the Search Box and click ‘‘Search.’’ Public comments can be submitted via the ‘‘Comment’’ box below the displayed document information or by clicking on the document title and then clicking the ‘‘Comment’’ box on the topleft side of the screen. For help with submitting effective comments please click on ‘‘Commenter’s Checklist.’’ For assistance with the Regulations.gov Beta site, please call (877) 378–5457 (toll free) or (703) 454–9859 Monday–Friday, 9 a.m.–5 p.m. ET or email regulations@ erulemakinghelpdesk.com. • Mail: Chief Counsel’s Office, Attention: Comment Processing, Office of the Comptroller of the Currency, 400 7th Street SW, Suite 3E–218, Washington, DC 20219. • Hand Delivery/Courier: 400 7th Street SW, Suite 3E–218, Washington, DC 20219. Instructions: You must include ‘‘OCC’’ as the agency name and ‘‘Docket ID OCC–2020–0037’’ in your comment. In general, the OCC will enter all comments received into the docket and publish the comments on the Regulations.gov website without change, including any business or personal information provided such as name and address information, email addresses, or phone numbers. Comments received, including attachments and other supporting materials, are part of the public record and subject to public disclosure. Do not include any information in your comment or supporting materials that you consider confidential or inappropriate for public disclosure. You may review comments and other related materials that pertain to this rulemaking action by the following methods: • Viewing Comments Electronically— Regulations.gov Classic or Regulations.gov Beta: Regulations.gov Classic: Go to https:// www.regulations.gov/. Enter ‘‘Docket ID OCC–2020–0037’’ in the Search box and click ‘‘Search.’’ Click on ‘‘Open Docket PO 00000 Frm 00001 Fmt 4702 Sfmt 4702 Folder’’ on the right side of the screen. Comments and supporting materials can be viewed and filtered by clicking on ‘‘View all documents and comments in this docket’’ and then using the filtering tools on the left side of the screen. Click on the ‘‘Help’’ tab on the Regulations.gov home page to get information on using Regulations.gov. The docket may be viewed after the close of the comment period in the same manner as during the comment period. Regulations.gov Beta: Go to https:// beta.regulations.gov/ or click ‘‘Visit New Regulations.gov Site’’ from the Regulations.gov Classic homepage. Enter ‘‘Docket ID OCC–2020–0037’’ in the Search Box and click ‘‘Search.’’ Click on the ‘‘Comments’’ tab. Comments can be viewed and filtered by clicking on the ‘‘Sort By’’ drop-down on the right side of the screen or the ‘‘Refine Results’’ options on the left side of the screen. Supporting materials can be viewed by clicking on the ‘‘Documents’’ tab and filtered by clicking on the ‘‘Sort By’’ drop-down on the right side of the screen or the ‘‘Refine Results’’ options on the left side of the screen.’’ For assistance with the Regulations.gov Beta site, please call (877) 378–5457 (toll free) or (703) 454– 9859 Monday–Friday, 9 a.m.–5 p.m. ET or email regulations@ erulemakinghelpdesk.com. The docket may be viewed after the close of the comment period in the same manner as during the comment period. FOR FURTHER INFORMATION CONTACT: Jim Vivenzio, Senior Counsel; Jina Cheon, Counsel; Henry Barkhausen, Counsel; or Scott Burnett, Counsel, Chief Counsel’s Office (202) 649–5490; Office of the Comptroller of the Currency, 400 7th Street SW, Washington, DC 20219. SUPPLEMENTARY INFORMATION: I. Introduction OCC regulations require national banks and federal savings associations to file Suspicious Activity Reports (SARs) under certain conditions. These regulations also provide for: (i) Board of director notification; (ii) filing exceptions; (iii) SAR confidentiality; (iv) recordkeeping requirements; (v) supporting documentation requirements; and (vi) limitations on liability. Requirements related to SARs are codified at 12 CFR 21.11 for national banks and 12 CFR 163.180 for federal savings associations. This proposed rule E:\FR\FM\22JAP1.SGM 22JAP1 Federal Register / Vol. 86, No. 13 / Friday, January 22, 2021 / Proposed Rules would amend those sections to allow the OCC to issue exemptions from the regulations’ SAR requirements. jbell on DSKJLSW7X2PROD with PROPOSALS II. Background The OCC has long required its regulated institutions to report potential violations of law arising from transactions that flow through those institutions.1 The OCC required such reporting because fraud, abusive insider transactions, check-kiting schemes, money laundering, and other financial crimes can pose serious threats to a financial institution’s continued viability and, if unchecked, can undermine the public confidence in the nation’s financial system generally.2 In 1992 Congress passed the Annunzio-Wylie Anti-Money Laundering Act, which redesigned the criminal referral process applicable to OCC supervised entities and made the reporting of certain suspicious transactions a requirement of the Bank Secrecy Act (BSA).3 The Act permitted the Department of the Treasury to require financial institutions, including national banks and federal savings associations, to ‘‘report any suspicious transaction relevant to a possible violation of law or regulation.’’ 4 As a result, the Department of the Treasury, in consultation with the OCC, the other federal banking agencies, and law enforcement, developed the modern SAR form and reporting process, which standardized the reporting forms and created a centralized database that could be accessed by multiple law enforcement and regulatory agencies. To implement this new reporting system, the Financial Crimes Enforcement Network of the Department of the Treasury (FinCEN) issued its implementing SAR regulations in 1996 for financial institutions subject to the 1 The OCC first codified this requirement in 1971 at 12 CFR 7.5225, which required national banks to submit a report to the OCC, the FBI, the U.S. attorney for the bank’s district, and the bank’s bonding company consisting of ‘‘any state of facts growing out of the affairs of the bank known or suspected to involve criminal violation of any other section of the United States Code.’’ 36 FR 17000, 17012 (Aug. 26, 1971). In 1986, the OCC repealed 12 CFR 7.5225 and adopted its criminal referral form regulation, 12 CFR 21.11, which required national banks to report specified suspicious transactions on a standardized criminal referral form. 51 FR 25866 (July 17, 1986). As explained below, the OCC revised 12 CFR 21.11 in the 1990s to conform to the new SAR reporting form and system. 2 54 FR 25839 (June 20, 1989). 3 Public Law 102–550, 106 Stat. 3672 (1992). 4 31 U.S.C. 5318(g)(1). The quoted text is from section 1517 of the Annunzio-Wylie Anti-Money Laundering Act, which was originally codified at 31 U.S.C. 5314(g). The text was moved as part of the Violent Crime Control and Law Enforcement Act of 1994. VerDate Sep<11>2014 16:14 Jan 21, 2021 Jkt 253001 requirements of the BSA to, among other things, specifically address the reporting of money laundering transactions and transactions designed to evade the reporting requirements of the BSA.5 To further implement this new reporting process and reduce unnecessary reporting burdens, the OCC and the other federal banking agencies contemporaneously amended their criminal referral form regulations to incorporate the new SAR form and reporting database, align their regulatory reporting requirements with FinCEN’s BSA reporting requirements, and further refine the reporting processes.6 As a result of this redesign and FinCEN’s implementing regulations, national banks and federal savings associations are currently required to file SARs under both OCC and FinCEN regulations. These regulations are not identical but are substantially similar with regard to the specified BSA reporting obligations required by FinCEN. Both the OCC’s and FinCEN’s SAR regulations require banks to file SARs relating to money laundering, transactions that are designed to evade the reporting requirements of the BSA, and transactions that have no business or apparent lawful purpose or are not the sort in which the particular customer would normally be expected to engage, and the bank knows of no reasonable explanation for the transactions after examining the available facts, including the background and possible purpose of the transactions.7 Furthermore, with respect to the SAR confidentiality requirements in the BSA, both the OCC’s and FinCEN’s SAR regulations require banks to maintain the confidentiality of a SAR and any information that would reveal the existence of the SAR, outside of certain circumstances. While the OCC and FinCEN regulations contain substantively similar requirements, including requiring reporting in certain common contexts and requiring institutions to maintain the confidentiality of SARs, the OCC and the other federal banking agencies require reporting in broader 5 61 FR 4326 (Feb. 5, 1996). Prior to the adoption of FinCEN’s SAR regulation in 1996 and the accompanying revisions to the OCC’s regulation, the OCC’s criminal referral regulation did not have a specific provision that required the reporting of money laundering transactions. However, the criminal referral regulation broadly encompassed money laundering and structuring transactions as explained in the Supplementary Information section to the final rule enhancing the criminal referral process. 54 FR 25839, 25840 (June 20, 1989). 6 61 FR 4332 (Feb. 5, 1996) (OCC). 7 See 12 CFR 21.11(c)(4); 163.180(d)(3)(iv); 31 CFR 1020.320(a)(2). PO 00000 Frm 00002 Fmt 4702 Sfmt 4702 6573 circumstances (e.g., insider abuse at any dollar amount).8 As previously noted, these violations and abuse situations can pose serious threats to financial institutions’ continued viability and, if unchecked, can undermine the public confidence in the nation’s financial industry. The OCC and FinCEN SAR regulations also provide: (i) That SARs are not required for a robbery or burglary committed or attempted that is reported to appropriate law enforcement authorities; (ii) that SARs are confidential and shall not be disclosed except as authorized; (iii) recordkeeping requirements for SARs and supporting documentation; (iv) that supporting documentation shall be deemed to have been filed with the SAR; and (v) that supporting documentation shall be made available to appropriate law enforcement agencies upon request. The regulations also provide a limitation on liability to any national bank, federal savings association or other financial institution and any director, officer, employee, or agent of a national bank or federal savings association or other financial institution that makes a voluntary disclosure of any possible violation of law or regulation to a government agency or files a SAR pursuant to the regulations or any other authority. The OCC’s regulations also contain a provision requiring that national banks and federal savings associations promptly notify their board of directors when a SAR has been filed. While neither the OCC’s SAR regulations nor FinCEN’s SAR reporting regulation contain provisions permitting exemptions, FinCEN has general authority to grant exemptions from the requirements of the BSA, which includes granting exemptions under its SAR reporting regulations.9 FinCEN’s regulation provides that ‘‘[t]he Secretary [of Treasury], in his sole discretion, may by written order or authorization make exceptions to or grant exemptions from the requirements of [the BSA]. Such exceptions or exemptions may be conditional or unconditional, may apply to particular persons or to classes of persons, and may apply to transactions or classes of transactions.’’ 10 The Secretary has delegated this exemption authority to FinCEN. This disparity in exemption authority makes it more difficult for the OCC to grant relief if a national bank or federal 8 12 CFR 208.62 (Board of Governors of the Federal Reserve); 12 CFR 390.353 (Federal Deposit Insurance Corporation); 12 CFR 748.1 (National Credit Union Administration). 9 See 31 U.S.C. 5318(a)(7), with implementing regulations at 31 CFR 1010.970. 10 31 CFR 1010.970(a). E:\FR\FM\22JAP1.SGM 22JAP1 6574 Federal Register / Vol. 86, No. 13 / Friday, January 22, 2021 / Proposed Rules jbell on DSKJLSW7X2PROD with PROPOSALS savings association has a novel SAR filing proposal that does not squarely fit within the regulatory requirements but would nonetheless be beneficial from an anti-money laundering regulatory and safety and soundness perspective. As financial technology and innovation continue to develop in the area of monitoring and reporting financial crime and terrorist financing, the OCC will need the express regulatory flexibility to grant exemptive relief when appropriate in this area on a consistent basis. In 2018 the OCC, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, FinCEN, and the National Credit Union Administration issued a statement encouraging banks to take innovative approaches to meet their BSA/anti-money laundering (BSA/AML) compliance obligations.11 That statement explained that banks are encouraged to consider, evaluate, and, where appropriate, responsibly implement innovative approaches in this area. Today, innovative approaches and technological developments in the areas of SAR monitoring, investigation, and filings may involve, among other things: (i) Automated form population using natural language processing, transaction data, and customer due diligence information; (ii) automated or limited investigation processes depending on the complexity and risk of a particular transaction and appropriate safeguards; and (iii) enhanced monitoring processes using more and better data, optical scanning, artificial intelligence, or machine learning capabilities. Requests for exemptive relief pertaining to innovation or other matters may involve, among other things, expanded investigations and SAR timing issues, SAR disclosures and sharing, continued SAR filings for ongoing activity, outsourcing of SAR processes, the role of agents of national banks and federal savings associations, the use of shared utilities and shared data, and the use and sharing of deidentified data. OCC expects that new technologies will continue to prompt additional innovative approaches related to SAR filing and monitoring. III. The Proposal The proposed rule would allow the OCC to issue exemptions from the requirements of its SAR regulations. Specifically, the proposed rule would add a provision to 12 CFR 21.11 and 12 CFR 163.180 that would provide that 11 Joint Statement on Innovative Efforts to Combat Money Laundering and Terrorist Financing (Dec. 3, 2018), available at https://www.occ.gov/newsissuances/news-releases/2018/nr-occ-2018130a.pdf. VerDate Sep<11>2014 16:14 Jan 21, 2021 Jkt 253001 the OCC may exempt a national bank or federal savings association from the requirements of those sections. As discussed above, the OCC’s SAR regulations contains some requirements that are not included in FinCEN’s SAR regulation. For exemption requests involving these OCC additional SAR requirements, a national bank or federal savings association would only need to seek an exemption from the OCC. The OCC believes that the proposed process is consistent with the purposes of the BSA and with safe and sound banking. For exemption requests from the requirements of the OCC’s SAR regulations that would also require an exemption from FinCEN’s SAR regulation, for example, exemption requests related to SAR filings required by 12 CFR 21.11(c)(4), or related to SAR timing requirements in 12 CFR 21.11(d), or related to SAR confidentiality in 12 CFR 21.11(k), a national bank would need to seek an exemption from both the OCC and FinCEN. Under the proposed rule, a national bank requesting an exemption from the requirements of 12 CFR 21.11, including exemptions related to SAR filings solely required by paragraphs (c)(1) through (3), must submit a request in writing to the OCC. In reviewing such requests, the OCC would consider whether the exemption is consistent with safe and sound banking, and any other appropriate factors, such as any outstanding supervisory concerns related to BSA/AML, including informal and formal enforcement actions. A national bank or federal savings association requesting an exemption from the requirements of the OCC’s SAR regulations that would also require an exemption from FinCEN’s SAR regulation, for example, an exemption request related to SAR filings under 12 CFR 21.11(c)(4) for national banks, would have to submit a request in writing to both the OCC and to FinCEN for approval. Upon receiving a written request from a national bank or federal savings association, the OCC would consider whether the exemption is consistent with the purposes of the Bank Secrecy Act, with safe and sound banking, and any other appropriate factors, such as any outstanding supervisory concerns related to BSA/ AML, including informal and formal enforcement actions. With respect to requests for exemption from the requirements of the OCC’s SAR regulations that would also require an exemption from FinCEN’s SAR regulation, the requestor would have to obtain exemptions from both agencies. The OCC also may notify the other federal banking agencies and consider PO 00000 Frm 00003 Fmt 4702 Sfmt 4702 their comments before granting any exemption. Such exemptions may be conditional or unconditional, may apply to particular persons or to classes of persons, and may apply to transactions or classes of transactions. In addition, the proposed rule provides that the OCC may grant an exemption for a specified time period. Under the proposed rule, the OCC could also revoke previously granted exemptions if circumstances change related to the factors set out above (e.g., consistency with the BSA and safety and soundness) or any imposed conditions. The OCC invites comments on the proposed rule, including whether any additional detail relating to the procedures that would be followed in considering, granting, or revoking exemptions is necessary. The OCC welcomes comments on any aspect of the proposed rule, in particular, with regard to whether additional or different factors or standards should be applied in the determination whether to grant an exemption request, as well as the form and manner of the OCC’s response to an exemption request. IV. Administrative Law Matters A. Solicitation of Comments and Use of Plain Language Section 722 of the Gramm-LeachBliley Act 12 requires the federal banking agencies to use plain language in all proposed and final rules published after January 1, 2000. The OCC has sought to present the proposed rule in a simple and straightforward manner, and invite comment on the use of plain language. For example: • Has the OCC organized the material to suit your needs? If not, how could the OCC present the proposed rule more clearly? • Are the requirements in the proposed rule clearly stated? If not, how could the proposed rule be more clearly stated? • Do the regulations contain technical language or jargon that is not clear? If so, which language requires clarification? • Would a different format (grouping and order of sections, use of headings, paragraphing) make the regulation easier to understand? If so, what changes would achieve that? • Would more, but shorter, sections be better? If so, which sections should be changed? • What other changes can the OCC incorporate to make the regulation easier to understand? 12 Public Law 106–102, sec. 722, 113 Stat. 1338, 1471 (1999). E:\FR\FM\22JAP1.SGM 22JAP1 Federal Register / Vol. 86, No. 13 / Friday, January 22, 2021 / Proposed Rules jbell on DSKJLSW7X2PROD with PROPOSALS B. Paperwork Reduction Act Analysis Certain provisions of the proposal contain ‘‘collection of information’’ requirements within the meaning of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501–3521) (PRA). In accordance with the requirements of the PRA, agencies may not conduct or sponsor, and a respondent is not required to respond to, an information collection unless it displays a currently valid Office of Management and Budget (OMB) control number. The OCC reviewed the proposed rulemaking and determined that it revises information collection requirements previously approved by OMB under OMB Control No. 1557–0180. The OCC has submitted the revised information collection to OMB for review under section 3507(d) of the PRA (44 U.S.C. 3507(d)) and § 1320.11 of the OMB’s implementing regulations (5 CFR part 1320). Current Actions. The proposal would revise 12 CFR 21.11 and 12 CFR 163.180 to allow national banks and federal savings associations to submit written requests for exemptions from the requirements of the OCC’s SAR regulations. The burden estimates below are based on the estimated number of banks and savings associations that might request such exemptions each year and the estimated number of hours required to submit such a request. National banks and federal savings associations may submit written requests for exemptions from the requirements of the OCC’s SAR regulations. 12 CFR 21.11(m) and 163.180(f). Title of Information Collection: Minimum Security Devices and Procedures, Reports of Suspicious Activities, and Bank Secrecy Act Compliance Program. Frequency: Event generated. Affected Public: Businesses or other for-profit. Estimated number of respondents: 5. Total estimated annual burden: 250 hours. Comments are invited on: a. Whether the collections of information are necessary for the proper performance of the agencies’ functions, including whether the information has practical utility; b. The accuracy or the estimate of the burden of the information collections, including the validity of the methodology and assumptions used; c. Ways to enhance the quality, utility, and clarity of the information to be collected; d. Ways to minimize the burden of the information collections on respondents, including through the use of automated VerDate Sep<11>2014 16:14 Jan 21, 2021 Jkt 253001 collection techniques or other forms of information technology; and e. Estimates of capital or startup costs and costs of operation, maintenance, and purchase of services to provide information. All comments will become a matter of public record. Comments on aspects of this document that may affect reporting, recordkeeping, or disclosure requirements and burden estimates should be sent to the addresses listed in the ADDRESSES section of this document. A copy of the comments may also be submitted to the OMB desk officer for the agencies by mail to U.S. Office of Management and Budget, 725 17th Street NW, #10235, Washington, DC 20503; facsimile to (202) 395–6974; or email to oira_submission@omb.eop.gov, Attention, Federal Banking Board Desk Officer. C. Regulatory Flexibility Act Analysis The Regulatory Flexibility Act, 5 U.S.C. 601 et seq., (RFA), requires an agency, in connection with a proposed rule, to prepare an Initial Regulatory Flexibility Analysis describing the impact of the rule on small entities (defined by the SBA for purposes of the RFA to include commercial banks and savings institutions with total consolidated assets of $600 million or less and trust companies with total consolidated assets of $41.5 million of less) or to certify that the proposed rule would not have a significant economic impact on a substantial number of small entities. As part of our analysis, we consider whether the proposal would have a significant economic impact on a substantial number of small entities, pursuant to the RFA. The OCC currently supervises approximately 745 small entities.13 Because the proposal imposes no new mandates, it would have only de minimis costs to OCC-supervised small entities. Therefore, the OCC certifies that the proposal would not have a significant economic impact on a substantial number of small entities. D. Riegle Community Development and Regulatory Improvement Act of 1994 Pursuant to section 302(a) of the Riegle Community Development and Regulatory Improvement Act (RCDRIA), in determining the effective date and 13 The OCC calculated the number of small entities using the SBA’s size thresholds for commercial banks and savings institutions, and trust companies, which are $550 million and $38.5 million, respectively. Consistent with the General Principles of Affiliation, 13 CFR 121.103(a), the OCC counted the assets of affiliated financial institutions when determining whether to classify a national bank or federal savings association as a small entity. PO 00000 Frm 00004 Fmt 4702 Sfmt 4702 6575 administrative compliance requirements for new regulations that impose additional reporting, disclosure, or other requirements on insured depository institutions, each federal banking agency must consider, consistent with principles of safety and soundness and the public interest, any administrative burdens that such regulations would place on insured depository institutions, including small depository institutions, and customers of depository institutions, as well as the benefits of such regulations.14 In addition, section 302(b) of RCDRIA requires new regulations and amendments to regulations that impose additional reporting, disclosures, or other new requirements on insured depository institutions generally to take effect on the first day of a calendar quarter that begins on or after the date on which the regulations are published in final form.15 The OCC requests comment on any administrative burdens that the proposed rule would place on depository institutions, including small depository institutions, and their customers, and the benefits of the proposed rule that the OCC should consider in determining the effective date and administrative compliance requirements for a final rule E. OCC Unfunded Mandates Reform Act of 1995 Determination Consistent with the Unfunded Mandates Reform Act of 1995 (UMRA), 2 U.S.C. 1532, the OCC considers whether the proposed rule 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 adjusted for inflation (currently $157 million) in any one year. The proposed rule does not impose new mandates. Therefore, the OCC concludes that implementation of the proposed rule would not result in an expenditure of $157 million or more annually by state, local, and tribal governments, or by the private sector. List of Subjects 12 CFR Part 21 Crime, Currency, National banks, Reporting and recordkeeping requirements, Security measures. 12 CFR Part 163 Accounting, Administrative practice and procedure, Advertising, Crime, Currency, Investments, Mortgages, Reporting and recordkeeping requirements, Savings associations. 14 12 15 12 E:\FR\FM\22JAP1.SGM U.S.C. 4802(a). U.S.C. 4802(b). 22JAP1 6576 Federal Register / Vol. 86, No. 13 / Friday, January 22, 2021 / Proposed Rules 1. The authority citation for part 21 is revised to read as follows: the OCC. The OCC will consider the response prior to deciding whether to revoke an exemption and will notify the national bank of the OCC’s decision to revoke an exemption in writing. (4) With respect to requests for exemption that will also require an exemption from the requirements of FinCEN’s SAR regulation, upon receiving approval from both the OCC and FinCEN, the requestor shall be relieved of its obligations under this section to the extent stated in such approvals. Authority: 12 U.S.C. 1, 93a, 161, 1462a, 1463, 1464, 1818, 1881–1884, and 3401– 3422. PART 163—SAVINGS ASSOCIATIONS—OPERATIONS Authority and Issuance For the reasons stated in the the OCC proposes to amend 12 CFR parts 21 and 163 as follows: SUPPLEMENTARY INFORMATION, PART 21—MINIMUM SECURITY DEVICES AND PROCEDURES, REPORTS OF SUSPICIOUS ACTIVITIES, AND BANK SECRECY ACT COMPLIANCE PROGRAM ■ 3. The authority citation for part 163 is revised to read as follows: ■ 2. In § 21.11, add paragraph (m) to read as follows: ■ § 21.11 Suspicious Activity Report. jbell on DSKJLSW7X2PROD with PROPOSALS * * * * * (m) Exemptions. (1) The OCC may exempt any national bank from the requirements of this section. A national bank requesting an exemption must submit a request in writing to the OCC. In reviewing such requests, the OCC will consider whether the exemption is consistent with safe and sound banking and may consider other appropriate factors. An exemption shall be applicable only as expressly stated in the exemption, may be conditional or unconditional, may apply to particular persons or to classes of persons, and may apply to transactions or classes of transactions. A national bank requesting an exemption that also requires an exemption from the requirements of FinCEN’s SAR regulation must submit a request in writing to both the OCC and FinCEN for approval. In reviewing such requests, the OCC will consider whether the exemption is consistent with the purposes of the Bank Secrecy Act, with safe and sound banking, and any other appropriate factors. (2) The OCC will provide a written response to the national bank that submitted the exemption request. A national bank that has received an exemption under paragraph (m)(1) of this section may rely on the exemption for a period of time to be communicated by the OCC in its granting of the exemption. (3) The OCC may extend the period of time or may revoke an exemption granted under paragraph (m)(1) of this section. Exemptions may be revoked at the sole discretion of the OCC. The OCC will provide written notice to the national bank of the OCC’s intention to revoke an exemption. Such notice will include the basis for the revocation and will provide an opportunity for the national bank to submit a response to VerDate Sep<11>2014 16:14 Jan 21, 2021 Jkt 253001 Authority: 12 U.S.C. 161, 1462a, 1463, 1464, 1467a, 1817, 1820, 1828, 1831o, 3806, 5101 et seq., 5412(b)(2)(B); 42 U.S.C. 4106. 2. In § 163.180, add paragraph (f) to read as follows: ■ § 163.180 Suspicious Activity Reports and other reports and statements. * * * * * (f) Exemptions. (1) The OCC may exempt any savings association or service corporation from the requirements of this section. A savings association or service corporation requesting an exemption from the provisions of this section, must submit a request in writing to the OCC. In reviewing such requests, the OCC will consider whether the exemption is consistent with safe and sound banking, and may consider other appropriate factors. An exemption shall be applicable only as expressly stated in the exemption, may be conditional or unconditional, may apply to particular persons or to classes of persons, and may apply to transactions or classes of transactions. A federal savings association requesting an exemption that also requires an exemption from the requirements of FinCEN’s SAR regulation must submit a request in writing to both the OCC and FinCEN for approval. In reviewing such requests, the OCC will consider whether the exemption is consistent with the purposes of the Bank Secrecy Act, with safe and sound banking, and any other appropriate factors. (2) The OCC will provide a written response to the savings association or service corporation that submitted the exemption request. A savings association or service corporation that has received an exemption under paragraph (f)(1) of this section may rely on the exemption for a period of time to be communicated by the OCC in its granting of the exemption. PO 00000 Frm 00005 Fmt 4702 Sfmt 4702 (3) The OCC may extend the period of time or may revoke an exemption granted under paragraph (f)(1) of this section. Exemptions may be revoked at the sole discretion of the OCC. The OCC will provide written notice to the savings association or service corporation of the OCC’s intention to revoke an exemption. Such notice will include the basis for the revocation and will provide an opportunity for the savings association or service corporation to submit a response to the OCC. The OCC will consider the response prior to deciding whether to revoke an exemption and will notify the savings association or service corporation of the OCC’s decision to revoke an exemption in writing. (4) With respect to requests for exemption that will also require an exemption from the requirements of FinCEN’s SAR regulation, upon receiving approval from both the OCC and FinCEN, the requestor shall be relieved of its obligations under this section to the extent stated in such approvals. Brian P. Brooks, Acting Comptroller of the Currency. [FR Doc. 2021–00034 Filed 1–21–21; 8:45 am] BILLING CODE 4810–33–P FEDERAL RESERVE SYSTEM 12 CFR Part 208 [Docket No. R–1738] RIN 7100–AG08 Membership of State Banking Institutions in the Federal Reserve System; Reports of Suspicious Activities Under Bank Secrecy Act Board of Governors of the Federal Reserve System (Board). ACTION: Notice of proposed rulemaking with request for public comment. AGENCY: The Board is inviting comment on a proposed rule that would modify the requirements to file Suspicious Activity Reports for state member banks, Edge and agreement corporations, U.S. offices of foreign banking organizations supervised by the Federal Reserve, and bank holding companies and their nonbank subsidiaries. Specifically, the proposed rule would amend the Board’s Suspicious Activity Report regulations to provide for the issuance of exemptions from the requirements of those regulations, in full or in part. The proposed rule is intended, among other things, to facilitate supervised SUMMARY: E:\FR\FM\22JAP1.SGM 22JAP1

Agencies

[Federal Register Volume 86, Number 13 (Friday, January 22, 2021)]
[Proposed Rules]
[Pages 6572-6576]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-00034]


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Proposed Rules
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains notices to the public of 
the proposed issuance of rules and regulations. The purpose of these 
notices is to give interested persons an opportunity to participate in 
the rule making prior to the adoption of the final rules.

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Federal Register / Vol. 86, No. 13 / Friday, January 22, 2021 / 
Proposed Rules

[[Page 6572]]



DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

12 CFR Parts 21 and 163

[Docket No. OCC-2020-0037]
RIN 1557-AE77


Exemptions to Suspicious Activity Report Requirements

AGENCY: Office of the Comptroller of the Currency (OCC), Treasury 
(USDT).

ACTION: Notice of proposed rulemaking with request for public comment.

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SUMMARY: The OCC is inviting comment on a proposed rule that would 
modify the requirements for national banks and federal savings 
associations to file Suspicious Activity Reports. The proposed rule 
would amend the OCC's Suspicious Activity Report regulations to allow 
the OCC to issue exemptions from the requirements of those regulations. 
The proposed rule makes it possible for the OCC to grant relief to 
national banks or federal savings associations that develop innovative 
solutions intended to meet Bank Secrecy Act requirements more 
efficiently and effectively.

DATES: Comments must be received by February 22, 2021.

ADDRESSES: Commenters are encouraged to submit comments through the 
Federal eRulemaking Portal, if possible. Please use the title 
``Exemptions to Suspicious Activity Report Requirements'' to facilitate 
the organization and distribution of the comments. You may submit 
comments by any of the following methods:
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the same manner as during the comment period.

FOR FURTHER INFORMATION CONTACT: Jim Vivenzio, Senior Counsel; Jina 
Cheon, Counsel; Henry Barkhausen, Counsel; or Scott Burnett, Counsel, 
Chief Counsel's Office (202) 649-5490; Office of the Comptroller of the 
Currency, 400 7th Street SW, Washington, DC 20219.

SUPPLEMENTARY INFORMATION:

I. Introduction

    OCC regulations require national banks and federal savings 
associations to file Suspicious Activity Reports (SARs) under certain 
conditions. These regulations also provide for: (i) Board of director 
notification; (ii) filing exceptions; (iii) SAR confidentiality; (iv) 
recordkeeping requirements; (v) supporting documentation requirements; 
and (vi) limitations on liability. Requirements related to SARs are 
codified at 12 CFR 21.11 for national banks and 12 CFR 163.180 for 
federal savings associations. This proposed rule

[[Page 6573]]

would amend those sections to allow the OCC to issue exemptions from 
the regulations' SAR requirements.

II. Background

    The OCC has long required its regulated institutions to report 
potential violations of law arising from transactions that flow through 
those institutions.\1\ The OCC required such reporting because fraud, 
abusive insider transactions, check-kiting schemes, money laundering, 
and other financial crimes can pose serious threats to a financial 
institution's continued viability and, if unchecked, can undermine the 
public confidence in the nation's financial system generally.\2\
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    \1\ The OCC first codified this requirement in 1971 at 12 CFR 
7.5225, which required national banks to submit a report to the OCC, 
the FBI, the U.S. attorney for the bank's district, and the bank's 
bonding company consisting of ``any state of facts growing out of 
the affairs of the bank known or suspected to involve criminal 
violation of any other section of the United States Code.'' 36 FR 
17000, 17012 (Aug. 26, 1971). In 1986, the OCC repealed 12 CFR 
7.5225 and adopted its criminal referral form regulation, 12 CFR 
21.11, which required national banks to report specified suspicious 
transactions on a standardized criminal referral form. 51 FR 25866 
(July 17, 1986). As explained below, the OCC revised 12 CFR 21.11 in 
the 1990s to conform to the new SAR reporting form and system.
    \2\ 54 FR 25839 (June 20, 1989).
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    In 1992 Congress passed the Annunzio-Wylie Anti-Money Laundering 
Act, which redesigned the criminal referral process applicable to OCC 
supervised entities and made the reporting of certain suspicious 
transactions a requirement of the Bank Secrecy Act (BSA).\3\ The Act 
permitted the Department of the Treasury to require financial 
institutions, including national banks and federal savings 
associations, to ``report any suspicious transaction relevant to a 
possible violation of law or regulation.'' \4\ As a result, the 
Department of the Treasury, in consultation with the OCC, the other 
federal banking agencies, and law enforcement, developed the modern SAR 
form and reporting process, which standardized the reporting forms and 
created a centralized database that could be accessed by multiple law 
enforcement and regulatory agencies.
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    \3\ Public Law 102-550, 106 Stat. 3672 (1992).
    \4\ 31 U.S.C. 5318(g)(1). The quoted text is from section 1517 
of the Annunzio-Wylie Anti-Money Laundering Act, which was 
originally codified at 31 U.S.C. 5314(g). The text was moved as part 
of the Violent Crime Control and Law Enforcement Act of 1994.
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    To implement this new reporting system, the Financial Crimes 
Enforcement Network of the Department of the Treasury (FinCEN) issued 
its implementing SAR regulations in 1996 for financial institutions 
subject to the requirements of the BSA to, among other things, 
specifically address the reporting of money laundering transactions and 
transactions designed to evade the reporting requirements of the 
BSA.\5\ To further implement this new reporting process and reduce 
unnecessary reporting burdens, the OCC and the other federal banking 
agencies contemporaneously amended their criminal referral form 
regulations to incorporate the new SAR form and reporting database, 
align their regulatory reporting requirements with FinCEN's BSA 
reporting requirements, and further refine the reporting processes.\6\
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    \5\ 61 FR 4326 (Feb. 5, 1996). Prior to the adoption of FinCEN's 
SAR regulation in 1996 and the accompanying revisions to the OCC's 
regulation, the OCC's criminal referral regulation did not have a 
specific provision that required the reporting of money laundering 
transactions. However, the criminal referral regulation broadly 
encompassed money laundering and structuring transactions as 
explained in the Supplementary Information section to the final rule 
enhancing the criminal referral process. 54 FR 25839, 25840 (June 
20, 1989).
    \6\ 61 FR 4332 (Feb. 5, 1996) (OCC).
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    As a result of this redesign and FinCEN's implementing regulations, 
national banks and federal savings associations are currently required 
to file SARs under both OCC and FinCEN regulations. These regulations 
are not identical but are substantially similar with regard to the 
specified BSA reporting obligations required by FinCEN. Both the OCC's 
and FinCEN's SAR regulations require banks to file SARs relating to 
money laundering, transactions that are designed to evade the reporting 
requirements of the BSA, and transactions that have no business or 
apparent lawful purpose or are not the sort in which the particular 
customer would normally be expected to engage, and the bank knows of no 
reasonable explanation for the transactions after examining the 
available facts, including the background and possible purpose of the 
transactions.\7\ Furthermore, with respect to the SAR confidentiality 
requirements in the BSA, both the OCC's and FinCEN's SAR regulations 
require banks to maintain the confidentiality of a SAR and any 
information that would reveal the existence of the SAR, outside of 
certain circumstances.
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    \7\ See 12 CFR 21.11(c)(4); 163.180(d)(3)(iv); 31 CFR 
1020.320(a)(2).
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    While the OCC and FinCEN regulations contain substantively similar 
requirements, including requiring reporting in certain common contexts 
and requiring institutions to maintain the confidentiality of SARs, the 
OCC and the other federal banking agencies require reporting in broader 
circumstances (e.g., insider abuse at any dollar amount).\8\ As 
previously noted, these violations and abuse situations can pose 
serious threats to financial institutions' continued viability and, if 
unchecked, can undermine the public confidence in the nation's 
financial industry.
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    \8\ 12 CFR 208.62 (Board of Governors of the Federal Reserve); 
12 CFR 390.353 (Federal Deposit Insurance Corporation); 12 CFR 748.1 
(National Credit Union Administration).
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    The OCC and FinCEN SAR regulations also provide: (i) That SARs are 
not required for a robbery or burglary committed or attempted that is 
reported to appropriate law enforcement authorities; (ii) that SARs are 
confidential and shall not be disclosed except as authorized; (iii) 
recordkeeping requirements for SARs and supporting documentation; (iv) 
that supporting documentation shall be deemed to have been filed with 
the SAR; and (v) that supporting documentation shall be made available 
to appropriate law enforcement agencies upon request. The regulations 
also provide a limitation on liability to any national bank, federal 
savings association or other financial institution and any director, 
officer, employee, or agent of a national bank or federal savings 
association or other financial institution that makes a voluntary 
disclosure of any possible violation of law or regulation to a 
government agency or files a SAR pursuant to the regulations or any 
other authority. The OCC's regulations also contain a provision 
requiring that national banks and federal savings associations promptly 
notify their board of directors when a SAR has been filed.
    While neither the OCC's SAR regulations nor FinCEN's SAR reporting 
regulation contain provisions permitting exemptions, FinCEN has general 
authority to grant exemptions from the requirements of the BSA, which 
includes granting exemptions under its SAR reporting regulations.\9\ 
FinCEN's regulation provides that ``[t]he Secretary [of Treasury], in 
his sole discretion, may by written order or authorization make 
exceptions to or grant exemptions from the requirements of [the BSA]. 
Such exceptions or exemptions may be conditional or unconditional, may 
apply to particular persons or to classes of persons, and may apply to 
transactions or classes of transactions.'' \10\ The Secretary has 
delegated this exemption authority to FinCEN.
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    \9\ See 31 U.S.C. 5318(a)(7), with implementing regulations at 
31 CFR 1010.970.
    \10\ 31 CFR 1010.970(a).
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    This disparity in exemption authority makes it more difficult for 
the OCC to grant relief if a national bank or federal

[[Page 6574]]

savings association has a novel SAR filing proposal that does not 
squarely fit within the regulatory requirements but would nonetheless 
be beneficial from an anti-money laundering regulatory and safety and 
soundness perspective. As financial technology and innovation continue 
to develop in the area of monitoring and reporting financial crime and 
terrorist financing, the OCC will need the express regulatory 
flexibility to grant exemptive relief when appropriate in this area on 
a consistent basis. In 2018 the OCC, the Board of Governors of the 
Federal Reserve System, the Federal Deposit Insurance Corporation, 
FinCEN, and the National Credit Union Administration issued a statement 
encouraging banks to take innovative approaches to meet their BSA/anti-
money laundering (BSA/AML) compliance obligations.\11\ That statement 
explained that banks are encouraged to consider, evaluate, and, where 
appropriate, responsibly implement innovative approaches in this area. 
Today, innovative approaches and technological developments in the 
areas of SAR monitoring, investigation, and filings may involve, among 
other things: (i) Automated form population using natural language 
processing, transaction data, and customer due diligence information; 
(ii) automated or limited investigation processes depending on the 
complexity and risk of a particular transaction and appropriate 
safeguards; and (iii) enhanced monitoring processes using more and 
better data, optical scanning, artificial intelligence, or machine 
learning capabilities. Requests for exemptive relief pertaining to 
innovation or other matters may involve, among other things, expanded 
investigations and SAR timing issues, SAR disclosures and sharing, 
continued SAR filings for ongoing activity, outsourcing of SAR 
processes, the role of agents of national banks and federal savings 
associations, the use of shared utilities and shared data, and the use 
and sharing of de-identified data. OCC expects that new technologies 
will continue to prompt additional innovative approaches related to SAR 
filing and monitoring.
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    \11\ Joint Statement on Innovative Efforts to Combat Money 
Laundering and Terrorist Financing (Dec. 3, 2018), available at 
https://www.occ.gov/news-issuances/news-releases/2018/nr-occ-2018-130a.pdf.
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III. The Proposal

    The proposed rule would allow the OCC to issue exemptions from the 
requirements of its SAR regulations. Specifically, the proposed rule 
would add a provision to 12 CFR 21.11 and 12 CFR 163.180 that would 
provide that the OCC may exempt a national bank or federal savings 
association from the requirements of those sections.
    As discussed above, the OCC's SAR regulations contains some 
requirements that are not included in FinCEN's SAR regulation. For 
exemption requests involving these OCC additional SAR requirements, a 
national bank or federal savings association would only need to seek an 
exemption from the OCC. The OCC believes that the proposed process is 
consistent with the purposes of the BSA and with safe and sound 
banking. For exemption requests from the requirements of the OCC's SAR 
regulations that would also require an exemption from FinCEN's SAR 
regulation, for example, exemption requests related to SAR filings 
required by 12 CFR 21.11(c)(4), or related to SAR timing requirements 
in 12 CFR 21.11(d), or related to SAR confidentiality in 12 CFR 
21.11(k), a national bank would need to seek an exemption from both the 
OCC and FinCEN.
    Under the proposed rule, a national bank requesting an exemption 
from the requirements of 12 CFR 21.11, including exemptions related to 
SAR filings solely required by paragraphs (c)(1) through (3), must 
submit a request in writing to the OCC. In reviewing such requests, the 
OCC would consider whether the exemption is consistent with safe and 
sound banking, and any other appropriate factors, such as any 
outstanding supervisory concerns related to BSA/AML, including informal 
and formal enforcement actions.
    A national bank or federal savings association requesting an 
exemption from the requirements of the OCC's SAR regulations that would 
also require an exemption from FinCEN's SAR regulation, for example, an 
exemption request related to SAR filings under 12 CFR 21.11(c)(4) for 
national banks, would have to submit a request in writing to both the 
OCC and to FinCEN for approval. Upon receiving a written request from a 
national bank or federal savings association, the OCC would consider 
whether the exemption is consistent with the purposes of the Bank 
Secrecy Act, with safe and sound banking, and any other appropriate 
factors, such as any outstanding supervisory concerns related to BSA/
AML, including informal and formal enforcement actions. With respect to 
requests for exemption from the requirements of the OCC's SAR 
regulations that would also require an exemption from FinCEN's SAR 
regulation, the requestor would have to obtain exemptions from both 
agencies.
    The OCC also may notify the other federal banking agencies and 
consider their comments before granting any exemption. Such exemptions 
may be conditional or unconditional, may apply to particular persons or 
to classes of persons, and may apply to transactions or classes of 
transactions. In addition, the proposed rule provides that the OCC may 
grant an exemption for a specified time period.
    Under the proposed rule, the OCC could also revoke previously 
granted exemptions if circumstances change related to the factors set 
out above (e.g., consistency with the BSA and safety and soundness) or 
any imposed conditions. The OCC invites comments on the proposed rule, 
including whether any additional detail relating to the procedures that 
would be followed in considering, granting, or revoking exemptions is 
necessary. The OCC welcomes comments on any aspect of the proposed 
rule, in particular, with regard to whether additional or different 
factors or standards should be applied in the determination whether to 
grant an exemption request, as well as the form and manner of the OCC's 
response to an exemption request.

IV. Administrative Law Matters

A. Solicitation of Comments and Use of Plain Language

    Section 722 of the Gramm-Leach-Bliley Act \12\ requires the federal 
banking agencies to use plain language in all proposed and final rules 
published after January 1, 2000. The OCC has sought to present the 
proposed rule in a simple and straightforward manner, and invite 
comment on the use of plain language. For example:
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    \12\ Public Law 106-102, sec. 722, 113 Stat. 1338, 1471 (1999).
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     Has the OCC organized the material to suit your needs? If 
not, how could the OCC present the proposed rule more clearly?
     Are the requirements in the proposed rule clearly stated? 
If not, how could the proposed rule be more clearly stated?
     Do the regulations contain technical language or jargon 
that is not clear? If so, which language requires clarification?
     Would a different format (grouping and order of sections, 
use of headings, paragraphing) make the regulation easier to 
understand? If so, what changes would achieve that?
     Would more, but shorter, sections be better? If so, which 
sections should be changed?
     What other changes can the OCC incorporate to make the 
regulation easier to understand?

[[Page 6575]]

B. Paperwork Reduction Act Analysis

    Certain provisions of the proposal contain ``collection of 
information'' requirements within the meaning of the Paperwork 
Reduction Act of 1995 (44 U.S.C. 3501-3521) (PRA). In accordance with 
the requirements of the PRA, agencies may not conduct or sponsor, and a 
respondent is not required to respond to, an information collection 
unless it displays a currently valid Office of Management and Budget 
(OMB) control number. The OCC reviewed the proposed rulemaking and 
determined that it revises information collection requirements 
previously approved by OMB under OMB Control No. 1557-0180. The OCC has 
submitted the revised information collection to OMB for review under 
section 3507(d) of the PRA (44 U.S.C. 3507(d)) and Sec.  1320.11 of the 
OMB's implementing regulations (5 CFR part 1320).
    Current Actions. The proposal would revise 12 CFR 21.11 and 12 CFR 
163.180 to allow national banks and federal savings associations to 
submit written requests for exemptions from the requirements of the 
OCC's SAR regulations. The burden estimates below are based on the 
estimated number of banks and savings associations that might request 
such exemptions each year and the estimated number of hours required to 
submit such a request. National banks and federal savings associations 
may submit written requests for exemptions from the requirements of the 
OCC's SAR regulations. 12 CFR 21.11(m) and 163.180(f).
    Title of Information Collection: Minimum Security Devices and 
Procedures, Reports of Suspicious Activities, and Bank Secrecy Act 
Compliance Program.
    Frequency: Event generated.
    Affected Public: Businesses or other for-profit.
    Estimated number of respondents: 5.
    Total estimated annual burden: 250 hours.
    Comments are invited on:
    a. Whether the collections of information are necessary for the 
proper performance of the agencies' functions, including whether the 
information has practical utility;
    b. The accuracy or the estimate of the burden of the information 
collections, including the validity of the methodology and assumptions 
used;
    c. Ways to enhance the quality, utility, and clarity of the 
information to be collected;
    d. Ways to minimize the burden of the information collections on 
respondents, including through the use of automated collection 
techniques or other forms of information technology; and
    e. Estimates of capital or startup costs and costs of operation, 
maintenance, and purchase of services to provide information.
    All comments will become a matter of public record. Comments on 
aspects of this document that may affect reporting, recordkeeping, or 
disclosure requirements and burden estimates should be sent to the 
addresses listed in the ADDRESSES section of this document. A copy of 
the comments may also be submitted to the OMB desk officer for the 
agencies by mail to U.S. Office of Management and Budget, 725 17th 
Street NW, #10235, Washington, DC 20503; facsimile to (202) 395-6974; 
or email to [email protected], Attention, Federal Banking 
Board Desk Officer.

C. Regulatory Flexibility Act Analysis

    The Regulatory Flexibility Act, 5 U.S.C. 601 et seq., (RFA), 
requires an agency, in connection with a proposed rule, to prepare an 
Initial Regulatory Flexibility Analysis describing the impact of the 
rule on small entities (defined by the SBA for purposes of the RFA to 
include commercial banks and savings institutions with total 
consolidated assets of $600 million or less and trust companies with 
total consolidated assets of $41.5 million of less) or to certify that 
the proposed rule would not have a significant economic impact on a 
substantial number of small entities.
    As part of our analysis, we consider whether the proposal would 
have a significant economic impact on a substantial number of small 
entities, pursuant to the RFA. The OCC currently supervises 
approximately 745 small entities.\13\ Because the proposal imposes no 
new mandates, it would have only de minimis costs to OCC-supervised 
small entities. Therefore, the OCC certifies that the proposal would 
not have a significant economic impact on a substantial number of small 
entities.
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    \13\ The OCC calculated the number of small entities using the 
SBA's size thresholds for commercial banks and savings institutions, 
and trust companies, which are $550 million and $38.5 million, 
respectively. Consistent with the General Principles of Affiliation, 
13 CFR 121.103(a), the OCC counted the assets of affiliated 
financial institutions when determining whether to classify a 
national bank or federal savings association as a small entity.
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D. Riegle Community Development and Regulatory Improvement Act of 1994

    Pursuant to section 302(a) of the Riegle Community Development and 
Regulatory Improvement Act (RCDRIA), in determining the effective date 
and administrative compliance requirements for new regulations that 
impose additional reporting, disclosure, or other requirements on 
insured depository institutions, each federal banking agency must 
consider, consistent with principles of safety and soundness and the 
public interest, any administrative burdens that such regulations would 
place on insured depository institutions, including small depository 
institutions, and customers of depository institutions, as well as the 
benefits of such regulations.\14\ In addition, section 302(b) of RCDRIA 
requires new regulations and amendments to regulations that impose 
additional reporting, disclosures, or other new requirements on insured 
depository institutions generally to take effect on the first day of a 
calendar quarter that begins on or after the date on which the 
regulations are published in final form.\15\ The OCC requests comment 
on any administrative burdens that the proposed rule would place on 
depository institutions, including small depository institutions, and 
their customers, and the benefits of the proposed rule that the OCC 
should consider in determining the effective date and administrative 
compliance requirements for a final rule
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    \14\ 12 U.S.C. 4802(a).
    \15\ 12 U.S.C. 4802(b).
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E. OCC Unfunded Mandates Reform Act of 1995 Determination

    Consistent with the Unfunded Mandates Reform Act of 1995 (UMRA), 2 
U.S.C. 1532, the OCC considers whether the proposed rule 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 adjusted for inflation (currently $157 million) in any one 
year. The proposed rule does not impose new mandates. Therefore, the 
OCC concludes that implementation of the proposed rule would not result 
in an expenditure of $157 million or more annually by state, local, and 
tribal governments, or by the private sector.

List of Subjects

12 CFR Part 21

    Crime, Currency, National banks, Reporting and recordkeeping 
requirements, Security measures.

12 CFR Part 163

    Accounting, Administrative practice and procedure, Advertising, 
Crime, Currency, Investments, Mortgages, Reporting and recordkeeping 
requirements, Savings associations.

[[Page 6576]]

Authority and Issuance

    For the reasons stated in the Supplementary Information, the OCC 
proposes to amend 12 CFR parts 21 and 163 as follows:

PART 21--MINIMUM SECURITY DEVICES AND PROCEDURES, REPORTS OF 
SUSPICIOUS ACTIVITIES, AND BANK SECRECY ACT COMPLIANCE PROGRAM

0
1. The authority citation for part 21 is revised to read as follows:

    Authority: 12 U.S.C. 1, 93a, 161, 1462a, 1463, 1464, 1818, 1881-
1884, and 3401-3422.

0
2. In Sec.  21.11, add paragraph (m) to read as follows:


Sec.  21.11  Suspicious Activity Report.

* * * * *
    (m) Exemptions. (1) The OCC may exempt any national bank from the 
requirements of this section. A national bank requesting an exemption 
must submit a request in writing to the OCC. In reviewing such 
requests, the OCC will consider whether the exemption is consistent 
with safe and sound banking and may consider other appropriate factors. 
An exemption shall be applicable only as expressly stated in the 
exemption, may be conditional or unconditional, may apply to particular 
persons or to classes of persons, and may apply to transactions or 
classes of transactions. A national bank requesting an exemption that 
also requires an exemption from the requirements of FinCEN's SAR 
regulation must submit a request in writing to both the OCC and FinCEN 
for approval. In reviewing such requests, the OCC will consider whether 
the exemption is consistent with the purposes of the Bank Secrecy Act, 
with safe and sound banking, and any other appropriate factors.
    (2) The OCC will provide a written response to the national bank 
that submitted the exemption request. A national bank that has received 
an exemption under paragraph (m)(1) of this section may rely on the 
exemption for a period of time to be communicated by the OCC in its 
granting of the exemption.
    (3) The OCC may extend the period of time or may revoke an 
exemption granted under paragraph (m)(1) of this section. Exemptions 
may be revoked at the sole discretion of the OCC. The OCC will provide 
written notice to the national bank of the OCC's intention to revoke an 
exemption. Such notice will include the basis for the revocation and 
will provide an opportunity for the national bank to submit a response 
to the OCC. The OCC will consider the response prior to deciding 
whether to revoke an exemption and will notify the national bank of the 
OCC's decision to revoke an exemption in writing.
    (4) With respect to requests for exemption that will also require 
an exemption from the requirements of FinCEN's SAR regulation, upon 
receiving approval from both the OCC and FinCEN, the requestor shall be 
relieved of its obligations under this section to the extent stated in 
such approvals.

PART 163--SAVINGS ASSOCIATIONS--OPERATIONS

0
3. The authority citation for part 163 is revised to read as follows:

    Authority: 12 U.S.C. 161, 1462a, 1463, 1464, 1467a, 1817, 1820, 
1828, 1831o, 3806, 5101 et seq., 5412(b)(2)(B); 42 U.S.C. 4106.

0
2. In Sec.  163.180, add paragraph (f) to read as follows:


Sec.  163.180  Suspicious Activity Reports and other reports and 
statements.

* * * * *
    (f) Exemptions. (1) The OCC may exempt any savings association or 
service corporation from the requirements of this section. A savings 
association or service corporation requesting an exemption from the 
provisions of this section, must submit a request in writing to the 
OCC. In reviewing such requests, the OCC will consider whether the 
exemption is consistent with safe and sound banking, and may consider 
other appropriate factors. An exemption shall be applicable only as 
expressly stated in the exemption, may be conditional or unconditional, 
may apply to particular persons or to classes of persons, and may apply 
to transactions or classes of transactions. A federal savings 
association requesting an exemption that also requires an exemption 
from the requirements of FinCEN's SAR regulation must submit a request 
in writing to both the OCC and FinCEN for approval. In reviewing such 
requests, the OCC will consider whether the exemption is consistent 
with the purposes of the Bank Secrecy Act, with safe and sound banking, 
and any other appropriate factors.
    (2) The OCC will provide a written response to the savings 
association or service corporation that submitted the exemption 
request. A savings association or service corporation that has received 
an exemption under paragraph (f)(1) of this section may rely on the 
exemption for a period of time to be communicated by the OCC in its 
granting of the exemption.
    (3) The OCC may extend the period of time or may revoke an 
exemption granted under paragraph (f)(1) of this section. Exemptions 
may be revoked at the sole discretion of the OCC. The OCC will provide 
written notice to the savings association or service corporation of the 
OCC's intention to revoke an exemption. Such notice will include the 
basis for the revocation and will provide an opportunity for the 
savings association or service corporation to submit a response to the 
OCC. The OCC will consider the response prior to deciding whether to 
revoke an exemption and will notify the savings association or service 
corporation of the OCC's decision to revoke an exemption in writing.
    (4) With respect to requests for exemption that will also require 
an exemption from the requirements of FinCEN's SAR regulation, upon 
receiving approval from both the OCC and FinCEN, the requestor shall be 
relieved of its obligations under this section to the extent stated in 
such approvals.

Brian P. Brooks,
Acting Comptroller of the Currency.
[FR Doc. 2021-00034 Filed 1-21-21; 8:45 am]
BILLING CODE 4810-33-P

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