OCC Confidentiality of SARS comment letter  2
3 Pages
English
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OCC Confidentiality of SARS comment letter 2

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3 Pages
English

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June 8, 2009 Office of the Comptroller of the Currency 250 E Street, SW Washington DC 20219 Attention: Docket Number OCC-2009-0004 Re: Confidentiality of Suspicious Activity Reports Dear Sir or Madam: 1The Independent Community Bankers of America (ICBA) welcomes the opportunity to comment on the Comptroller of the Currency’s (OCC’s) notice of proposed rulemaking on clarifying the confidentiality requirements of a report of a suspicious transaction. The Bank Secrecy Act (BSA) and its implementing regulations require financial institutions, including national banks, to file a Suspicious Activity Report (SAR) when a known or suspected violation of Federal law or a suspicious activity related to money laundering, terrorist financing or other criminal activity is detected. The BSA prohibits notifying any person involved in a suspicious transaction that the transaction was reported. Regulations by the Federal bank regulatory agencies and the Financial Crimes Enforcement Network (FinCEN) implemented the prohibition on SAR disclosure and generally no information about or contained in a SAR may be disclosed. The OCC is proposing amendments to these rules to clarify the standards governing SAR disclosure. The rules prohibiting the disclosure of SARs are unclear and vague, generating numerous questions regarding information that is subject to the prohibition. Accordingly, the OCC is proposing to amend its ...

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June 8, 2009
Office of the Comptroller of the Currency
250 E Street, SW
Washington DC 20219
Attention:
Docket Number OCC-2009-0004
Re:
Confidentiality of Suspicious Activity Reports
Dear Sir or Madam:
The Independent Community Bankers of America
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(ICBA) welcomes the
opportunity to comment on the Comptroller of the Currency’s (OCC’s) notice of
proposed rulemaking on clarifying the confidentiality requirements of a report of a
suspicious transaction.
The Bank Secrecy Act (BSA) and its implementing regulations require financial
institutions, including national banks, to file a Suspicious Activity Report (SAR)
when a known or suspected violation of Federal law or a suspicious activity
related to money laundering, terrorist financing or other criminal activity is
detected.
The BSA prohibits notifying any person involved in a suspicious
transaction that the transaction was reported.
Regulations by the Federal bank
regulatory agencies and the Financial Crimes Enforcement Network (FinCEN)
implemented the prohibition on SAR disclosure and generally no information
about or contained in a SAR may be disclosed.
The OCC is proposing
amendments to these rules to clarify the standards governing SAR disclosure.
The rules prohibiting the disclosure of SARs are unclear and vague, generating
numerous questions regarding information that is subject to the prohibition.
Accordingly, the OCC is proposing to amend its rules to indicate that SAR
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The Independent Community Bankers of America represents nearly 5,000 community banks of all sizes and charter types throughout the
United States and is dedicated exclusively to representing the interests of the community banking industry and the communities and
customers we serve. ICBA aggregates the power of its members to provide a voice for community banking interests in Washington,
resources to enhance community bank education and marketability, and profitability options to help community banks compete in an
everchanging marketplace.
With nearly 5,000 members, representing more than 20,000 locations nationwide and employing nearly
300,000 Americans, ICBA members hold $1 trillion in assets, $800 billion in deposits, and $700 billion in
loans to consumers, small businesses and the agricultural community. For more information, visit ICBA’s
Website at www.icba.org.
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information may not be disclosed, except as authorized in the narrow
circumstances identified.
ICBA believes expressly stating the specific conditions
under which a SAR can be disclosed provides additional guidance to community
banks and removes the uncertainty regarding the circumstances under which
SAR information can be shared.
Furthermore, the OCC is proposing that in addition to the confidentiality of the
SAR form itself, confidential treatment must also be afforded to “any information
that would reveal the existence of a SAR.”
We agree that this additional
language would strengthen the confidential nature of a SAR, which is important
to community banks which value the safeguarding of sensitive information.
If a
bank believes the existence of a SAR could be revealed for purposes other than
for law enforcement, it may be reluctant to candidly report suspicious
transactions with the level of detail that is helpful in potential investigations.
Additionally, the disclosure of a SAR could inadvertently result in notification to
an individual involved in the reported transaction and may risk a community
bank’s relationship with its customer.
The bank would be placed in a precarious
position of defending the SAR filing without disclosing its existence.
For these
reasons, we believe information revealing the existence of a SAR should be
afforded the same protection from disclosure as the SAR form itself.
Moreover, it is important to clarify that while information revealing the existence
of a SAR is confidential, documents and transactions created in the ordinary
course of business that give rise to the reporting may be disclosed in certain
circumstances.
Therefore, we appreciate that the proposed rules expressly state
that underlying facts, transactions, and documents upon which a SAR is based
may be disclosed to another financial institution for the preparation of a joint SAR
or in connection with certain employment references or termination notices.
The OCC is also proposing to include BSA statutory language in its rules that
specifically subjects directors, officers, employees, and agents of a national bank
to the confidentiality requirements.
While we support incorporating the statutory
language in the rules, we believe a bank should be protected from liability if its
agent inadvertently discloses SAR information, provided the bank has
appropriate internal controls and safeguards in place to ensure that its agent
protects the confidentiality of a SAR.
Financial institutions have a long history of working with third-parties or agents to
perform essential bank functions.
They already are subject to comprehensive
Gramm-Leach-Bliley Act
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(GLB Act) privacy and data security responsibilities,
which require policies and procedures to protect the security and integrity of
confidential information.
Additionally, before a bank shares sensitive information
with a service provider, it must enter into a contract with the third party that
requires it to maintain the confidentiality of the information and generally prohibits
the third party from disclosing or using the information other than to carry out the
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15 U.S.C. 6801 (1999)
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purposes for which the information was disclosed.
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As such, the bank has a
responsibility to have appropriate controls in place when sharing sensitive
information.
We suggest the OCC provide that a national bank that is subject to
the GLB Act shall be protected from liability for any inadvertent disclosure of SAR
information by its agent.
A national bank that is subpoenaed or otherwise requested to disclose SAR
information must decline to provide the information and must notify the OCC of
the request.
The proposed rulemaking would require a national bank to also
submit to OCC its response to the request, and provide the same information to
the Financial Crimes Enforcement Network (FinCEN).
ICBA believes this
provision is redundant and not necessary to comply with the standards governing
SAR disclosure.
The additional notification requirement was added so that either
or both the OCC and FinCEN can intervene, if necessary, to prevent the
disclosure of SAR information by a bank.
Informing only the OCC should be
sufficient notification and provide adequate information for the agency to contact
FinCEN directly to determine whether intervention is needed.
The proposed rules make clear that a national bank may share SAR information
within its corporate organizational structure for purposes consistent with the BSA.
FinCEN issued additional guidance that further elaborates on sharing of SAR
information within a corporate organization, to which ICBA is submitting
comments in a separate letter to FinCEN.
ICBA appreciates the opportunity to offer comments in connection with OCC’s
notice of proposed rulemaking on clarifying the scope of the statutory prohibition
on the disclosure of a report of a suspicious transaction.
If you have any
questions about our letter or need additional information, please do not hesitate
to contact me at 202-659-8111 or by email at Lilly.Thomas@icba.org.
Sincerely,
/s/
Lilly Thomas
Regulatory Counsel
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12 C.F.R.§ 40.13