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the Board’s granting of relief to a bank regulations that impose additional the exemption, may be conditional or seeking relief from the requirements of reporting, disclosures, or other new unconditional, may apply to particular the Board’s SAR regulations, when such requirements on insured depository persons or classes of persons, and may relief would be beneficial from a safety- institutions generally to take effect on apply to transactions or classes of and-soundness and anti-money the first day of a calendar quarter that transactions. laundering regulatory perspective. The begins on or after the date on which the (ii) The Board will seek FinCEN’s proposed rule would be issued pursuant regulations are published in final concurrence with regard to any to the Board’s safety-and-soundness form.14 The proposed rule would not exemption request that would also authority over supervised institutions. impose additional reporting, disclosure, require an exemption from FinCEN’s The proposed rule will apply to small or other requirements; therefore the SAR regulations, and may consult with bank holding companies and their requirements of the RCDRIA do not FinCEN regarding other exemption nonbank subsidiaries and small state apply. requests. The Board also may consult member banks as well as Edge and However, the agencies invite with the other state and federal banking agreement corporations, and U.S. offices comments that further will inform the agencies and consider comments before of foreign banking organizations agencies’ consideration of RCDRIA. granting any exemption. supervised by the Federal Reserve. The (2) The Board will provide a written Board does not expect that the proposal List of Subjects in 12 CFR Part 208 response to the member bank that would impose a significant cost on Accounting, Agriculture, Banks, submitted the exemption request after small banking organizations due to Banking, Confidential business considering whether the exemption is compliance, recordkeeping, and information, Consumer protection, consistent with safe and sound banking, reporting updates from this proposal. Crime, Currency, Federal Reserve consulting with the appropriate The Board does not believe that the System, Flood insurance, Insurance, agencies, and seeking concurrence when proposal would result in any significant Investments, Mortgages, Reporting and appropriate. A member bank that has economic impact on banking recordkeeping requirements, Securities. received an exemption under paragraph organizations as there are no projected (1) of this section may rely on the Authority and Issuance recordkeeping, reporting, or other exemption for a period of time to be compliance requirements associated For the reasons stated in the communicated by the Board in its with the proposal. Moreover, the preamble, the Board of Governors of the granting of the exemption, which may proposal does not impose any new Federal Reserve System proposes to be indefinite. requirements on banking organization, amend 12 CFR part 208 as follows: (3) The Board may extend the period as applying for an exemption under the of time or may revoke an exemption proposal would be entirely voluntary. In PART 208—MEMBERSHIP OF STATE granted under paragraph (1) of this addition, the Board is not aware of any BANKING INSTITUTIONS IN THE section. Exemptions may be revoked at federal rules that duplicate, overlap, or FEDERAL RESERVE SYSTEM the sole discretion of the Board. The conflict with the proposed rule. For (REGULATION H) Board will provide written notice to the member bank of the Board’s intention to these reasons, the Board believes that ■ 1. The authority citation for part 208 revoke an exemption. Such notice will the proposed rule will not have a continues to read as follows: significant economic impact on a include the basis for the revocation and substantial number of small entities Authority: 12 U.S.C. 24, 36, 92a, 93a, will provide an opportunity for the supervised by the Board, and believes 248(a), 248(c), 321–338a, 371d, 461, 481–486, member bank to submit a response to 601, 611, 1814, 1816, 1817(a)(3), 1817(a)(12), that there are no significant alternatives the Board. The Board will consider the 1818, 1820(d)(9), 1833(j), 1828(o), 1831, response prior to deciding whether to to the proposed rule that would reduce 1831o, 1831p–1, 1831r–1, 1831w, 1831x, the economic impact on small banking 1835a, 1882, 2901–2907, 3105, 3310, 3331– revoke an exemption, and will notify organizations supervised by the Board. 3351, 3905–3909, 5371, and 5371 note; 15 the member bank of the Board’s final decision to revoke an exemption in D. Riegle Community Development and U.S.C. 78b, 78I(b), 78l(i), 780–4(c)(5), 78q, 78q–1, 78w, 1681s, 1681w, 6801, and 6805; writing. Regulatory Improvement Act of 1994 31 U.S.C. 5318; 42 U.S.C. 4012a, 4104a, By order of Board of Governors of the Pursuant to section 302(a) of the 4104b, 4106, and 4128. Federal Reserve System. Riegle Community Development and ■ 2. In § 208.62, add a new paragraph (l) Ann Misback, Regulatory Improvement Act (RCDRIA), to read as follows: Secretary of the Board. in determining the effective date and [FR Doc. 2021–00033 Filed 1–21–21; 8:45 am] administrative compliance requirements § 208.62 Suspicious activity reports. BILLING CODE 6210–01–P for new regulations that impose * * * * * additional reporting, disclosure, or other (l) Exemptions. requirements on insured depository (1)(i) The Board may exempt any institutions, each federal banking member bank from the requirements of FEDERAL DEPOSIT INSURANCE agency must consider, consistent with this section. Upon receiving a written CORPORATION principles of safety and soundness and request from a member bank, the Board 12 CFR Part 353 the public interest, any administrative will consider whether the exemption is burdens that such regulations would consistent with safe and sound banking RIN 3064–AF56 place on insured depository institutions, and may consider other appropriate including small depository institutions, factors. The Board also would seek Exemptions to Suspicious Activity and customers of depository FinCEN’s determination whether the Report Requirements institutions, as well as the benefits of exemption is consistent with the AGENCY: Federal Deposit Insurance such regulations.13 In addition, section purposes of the Bank Secrecy Act, if Corporation. 302(b) of RCDRIA requires new applicable. The exemption shall be ACTION: Notice of proposed rulemaking. regulations and amendments to applicable only as expressly stated in SUMMARY: The FDIC is inviting comment 13 12 U.S.C. 4802(a). 14 12 U.S.C. 4802(b). on a proposed rule that would modify

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the requirements for FDIC-supervised Treasury (FinCEN), to FDIC-supervised possible violation of law or institutions to file Suspicious Activity institutions that develop innovative regulation.’’ 3 Thereafter, the Reports (SARs). The proposed rule solutions to meet BSA requirements Department of the Treasury, in would amend the FDIC’s SAR regulation more efficiently and effectively. The consultation with the FDIC, the other to allow the FDIC to issue exemptions FDIC is proposing this rule as a federal banking agencies, and law from the SAR requirements. The proactive measure to address the enforcement, developed the modern proposed rule would make it possible likelihood that FDIC-supervised SAR form and reporting process, which for the FDIC to grant relief to FDIC- institutions will leverage existing or standardized the reporting forms and supervised institutions that develop future technologies to report created a centralized database that could innovative solutions to meet Bank information concerning suspicious be accessed by multiple law Secrecy Act (BSA) requirements more activity in a different manner or time enforcement and regulatory agencies. efficiently and effectively. frame or to share SAR-related To implement this new reporting DATES: Comments are due on or before information. This change would more system, FinCEN implemented its SAR 4 February 22, 2021. Comments on the closely align the FDIC’s regulation with regulation in 1996 for financial Paperwork Reduction Act burden FinCEN’s regulation. FinCEN, unlike the institutions subject to BSA requirements estimates are due on or before March 23, FDIC, has broad statutory authority to to address, among other things, the 2021. issue exemptions from the SAR filing reporting of money laundering requirements. Because the FDIC’s SAR transactions and transactions designed ADDRESSES: You may submit comments, to evade the reporting requirements of identified by RIN 3064–AF56, by any of regulations do not currently contain any provision by which the FDIC can issue the BSA.5 To further implement this the following methods: new reporting process and reduce • FDIC Website: https:// case-by-case exemptions, a situation unnecessary reporting burdens, the www.fdic.gov/regulations/laws/federal/. could arise in which FinCEN grants an FDIC and the other federal banking Follow instructions for submitting exemption from the SAR filing agencies contemporaneously amended comments on the agency website. requirements to an FDIC-supervised • FDIC Email: [email protected]. institution, but the institution would their criminal referral form regulations Include RIN 3064–AF56 on the subject still need to file a SAR if the to incorporate the new SAR form and line of the message. circumstance fell within the FDIC’s SAR reporting database, align their regulatory • Mail: Robert E. Feldman, Executive rule. The proposed rule would allow the reporting requirements with FinCEN’s FDIC to grant exemptions from SAR reporting requirements, and further Secretary, Attention: Comments, Federal 6 Deposit Insurance Corporation, 550 17th filing requirements in conjunction with refine the reporting processes. As a result of this redesign and Street NW, Washington, DC 20429. FinCEN to reduce potential regulatory • Hand Delivery/Courier: Comments burden when a request involves the FinCEN’s implementing regulation, FDIC-supervised institutions are may be hand-delivered to the guard SAR filing requirements of both FinCEN currently required under both FDIC and station at the rear of the 550 17th Street and the FDIC. FinCEN regulations to file SARs. These building (located on F Street) on II. Background regulations are not identical but are business days between 7 a.m. and 5 p.m. The FDIC has long required its Please include your name, affiliation, substantially similar. Both SAR supervised institutions to report address, email address, and telephone regulations require, among other things, potential violations of law arising from FDIC-supervised institutions to file number(s) in your comment. All transactions that flow through those SARs relating to money laundering and statements received, including institutions. From 1986 to 1996, FDIC- transactions that are designed to evade attachments and other supporting supervised institutions filed criminal the reporting requirements of the BSA, materials, are part of the public record referral forms with the FDIC, Federal as well as maintain the confidentiality and are subject to public disclosure. Bureau of Investigation, and the local of a SAR in most circumstances.7 You should submit only information U.S. Attorney’s office.1 The FDIC However, the FDIC’s SAR regulation that you wish to make publicly required reporting through criminal covers a slightly broader range of available. transactions, for example, by requiring Please note: All comments received referral forms to facilitate the reporting SARs to be filed for any known or will be posted generally without change of potential violations to law suspected instance of insider abuse in to http://www.fdic.gov/regulations/laws/ enforcement. In 1992, Congress passed the any amount, and further requiring the federal, including any personal Annunzio-Wylie Anti-Money information provided. Laundering Act, which redesigned the 3 31 U.S.C. 5318(g)(1). The quoted text is from FOR FURTHER INFORMATION CONTACT: Lisa criminal referral process applicable to section 1517 of the Annunzio-Wylie Anti-Money Arquette, Associate Director, (202) 898– FDIC-supervised institutions and made Laundering Act, which was originally codified at 31 8633, [email protected], Division of U.S.C. 5314(g). The text was moved as part of the the reporting of certain suspicious Violent Crime Control and Law Enforcement Act of Risk Management Supervision; John transactions a requirement of the BSA.2 1994. Dorsey, Acting Supervisory Counsel, The Annunzio-Wylie Anti-Money 4 FinCEN is the Administrator of the Bank (202) 898–3807, [email protected], Legal Laundering Act permitted the Secrecy Act. Division; or Constantine Lizas, Counsel, 5 61 FR 4326 (Feb. 5, 1996). Prior to the adoption Department of the Treasury to require of FinCEN’s SAR regulation in 1996 and the (202) 898–6925, [email protected], Legal financial institutions, including FDIC- accompanying revisions to the FDIC’s regulation, Division. supervised institutions, to ‘‘report any the FDIC’s criminal referral regulation had no specific provision requiring the reporting of money SUPPLEMENTARY INFORMATION: suspicious transaction relevant to a laundering transactions. See footnote 1. However, I. Policy Objectives the FDIC’s criminal referral regulation prior to the 1 The FDIC first codified this requirement in 1986 SAR regulation broadly encompassed money The policy objective of the proposed at 12 CFR part 353 (1986), which required FDIC laundering and structuring transactions. See 58 FR rule is to allow the FDIC to grant SAR insured state non-member banks to report 28757, 28772 (May 17, 1993). ‘‘apparent violation[s]’’ of federal criminal law. 51 6 61 FR 6095 (Feb. 16, 1996) (FDIC); 61 FR 6100 filing exemptions, in conjunction with FR 16485, 16486 (May 5, 1986). (Feb. 16, 1996) (OTS); 61 FR 4326 (Feb. 5, 1996) the Financial Crimes Enforcement 2 Public Law 102–550, 106 Stat. 3672 (Oct. 28, (FinCEN). Network of the Department of the 1992). 7 See 12 CFR part 353; 31 CFR 1020.320(a)(2).

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prompt notification to the institution’s data, and customer due diligence the filing of a SAR for potential money board of directors when a SAR has been information; (ii) automated or limited laundering, violations of the BSA, or filed. investigation processes depending on other unusual activity covered by FinCEN has general authority to grant the complexity and risk of a particular FinCEN’s SAR regulation. When a exemptions from the BSA’s transaction and appropriate safeguards; request involves the SAR filing requirements, which includes granting and (iii) enhanced monitoring processes requirements of both FinCEN and the exemptions under its SAR reporting using more and better data, optical FDIC, the proposed rule would require regulation.8 FinCEN’s regulation scanning, artificial intelligence, or the FDIC to seek FinCEN’s concurrence. provides that ‘‘[t]he Secretary [of machine learning capabilities. Requests In addition, the proposed rule provides Treasury], in his sole discretion, may by for exemptive relief pertaining to that the FDIC may grant an exemption written order or authorization make innovation or other matters may for a specified time period. The exceptions to or grant exemptions from involve, among other things, expanded supervised institution would then be the requirements of [the BSA]. Such investigations and SAR timing issues, able to rely on the exemption for a exceptions or exemptions may be SAR disclosures and sharing, continued period of time as determined and conditional or unconditional, may apply SAR filings for ongoing activity, SAR communicated by the FDIC. Under the to particular persons or to classes of outsourcing of responsibilities and proposed rule, the FDIC could also persons, and may apply to transactions practices, the role of agents of FDIC- extend or revoke previously granted or classes of transactions.’’ The supervised institutions, the use of exemptions if circumstances change Secretary of Treasury delegated this shared utilities and shared data, and the related to the factors set out above exemption authority to FinCEN. In use and sharing of de-identified data (consistent with the BSA and safety and contrast, the FDIC’s SAR regulations (commonly referred to as anonymized soundness), or any imposed conditions. contain a discrete set of filing data). The FDIC expects that new exemptions pertaining to physical technologies will continue to prompt A. Part 353.3(d) Exemptions crimes (robberies and burglaries), and additional innovative approaches Section 353.3(d) sets forth exemptions lost, missing, counterfeit, or stolen related to suspicious activity monitoring from the FDIC’s SAR regulation. securities. and SAR filing. Currently, Section 353.3(d)(1) exempts This disparity in exemptions makes it If the FDIC adopts the proposed rule FDIC-supervised institutions from filing more difficult for the FDIC to grant relief and uses it to grant exemptions, the a SAR for a committed or attempted if an FDIC-supervised institution has a exemptions would not relieve FDIC- robbery or burglary that is reported to novel SAR filing proposal that does not supervised institutions from the the appropriate law enforcement squarely fit within the FDIC’s regulatory obligation to comply with FinCEN’s authorities. Section 353.3(d)(2) exempts requirements, but would nonetheless be SAR regulation when applicable. To the an FDIC-supervised institution from consistent with safe and sound banking extent an exemption request from an filing a SAR for lost, missing, and with the BSA. As financial FDIC-supervised institution involves counterfeit, or stolen securities if the technology and innovation continue to both the FDIC’s SAR regulation and institution files a report pursuant to the FinCEN’s SAR regulation, the FDIC- develop in the area of monitoring and reporting requirements of 17 CFR supervised institution would need an reporting financial crime and terrorist 240.17f–1. The proposed rule would exemption from both the FDIC and financing, the FDIC will need the add three paragraphs to § 353.3(d). express regulatory flexibility to grant FinCEN. The FDIC expects to coordinate exemptive relief when appropriate in with FinCEN when handling parallel B. Part 353.3(d)(3) exemptions. As explained above, this area. The proposed paragraph (d)(3) would Moreover, in 2018, the FDIC, the however, the FDIC’s SAR regulation imposes additional requirements not permit the FDIC to exempt any FDIC- Board of Governors of the Federal supervised institution from the Reserve System, the National Credit included in FinCEN’s SAR regulation. To the extent an exemption request is requirements of 12 CFR 353.3. Upon Union Administration, the Office of the receiving a written request from an Comptroller of the Currency, and subject to a requirement imposed by the FDIC’s SAR regulation alone (and not a FDIC-supervised institution, the FDIC FinCEN issued a statement encouraging would determine whether the banks to take innovative approaches to parallel FinCEN requirement), the proposed rule would allow the FDIC to exemption is consistent with safe and meet their BSA/Anti-Money Laundering sound banking. The FDIC would also 9 exempt a supervised institution from compliance obligations. The statement seek FinCEN’s determination whether 10 that requirement. explained that banks are encouraged the exemption is consistent with the to consider, evaluate, and where III. Proposed Regulation Changes purposes of the BSA, as applicable, appropriate, responsibly implement where an exemption request also innovative approaches in this area. The proposed rule would add three paragraphs to 12 CFR 353.3(d) of the requires an exemption from FinCEN’s Today, innovative approaches and SAR regulation. The exemptions may be technological developments in the areas FDIC Rules and Regulations that would permit the FDIC to exempt a supervised conditional or unconditional, may apply of SAR monitoring, investigation, and institution from the requirements, in to particular persons or to classes of filing may involve, among other things: full or in part, of 12 CFR 353.3. Under persons, and may apply to transactions (i) Automated form population using the proposed rule, the FDIC in or classes of transactions. natural language processing, transaction evaluating an exemption request would The proposed paragraph (d)(3) would 8 See 31 U.S.C. 5318(a)(7), with implementing determine whether the request is require the FDIC to seek FinCEN’s regulations at 31 CFR 1010.970. consistent with safe and sound banking, concurrence regarding an exemption 9 See https://www.fdic.gov/news/news/press/ and may consider other appropriate request that also requires an exemption 2018/pr18091a.pdf. factors. The FDIC would also seek from FinCEN’s SAR regulation. The 10 Under the Bank Secrecy Act, the term ‘‘bank’’ FinCEN’s determination whether the proposed paragraph (d)(3) would permit is defined in 31 CFR 1010.100(d) and includes each agent, agency, branch, or office within the United exemption request is consistent with the the FDIC to consult with FinCEN States of banks, savings associations, credit unions, purposes of the BSA, as applicable, regarding other exemption requests. The and foreign banks. where an exemption request involves FDIC may also consult with the other

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state and federal banking agencies existing or future technologies to gather second quarter of 2020 related to before granting any exemption. and submit the information contained in reviewing alerts, and drafting, writing, SARs to the appropriate law submitting, and storing SAR filings and C. Part 353.3(d)(4) enforcement authorities and regulatory documentation, which amounts to The proposed paragraph (d)(4) would agencies in a more efficient and cost annual estimated costs of $15.2 million require that, after the FDIC has received effective manner. This change would for FDIC-supervised institutions in FinCEN’s concurrence and consulted more closely align the FDIC’s aggregate. with appropriate agencies, the FDIC regulations with those of FinCEN, The FDIC estimated the provide a written response to the FDIC- which has broad statutory authority to recordkeeping, reporting, and disclosure supervised institution that submitted issue exemptions from SAR filing costs of filing SARs for each FDIC- the exemption request. An FDIC- requirements. Because the FDIC’s SAR supervised institution in the second supervised institution that has received regulations do not currently contain any quarter of 2020 using data on SAR an exemption under paragraph (d)(3) provision by which the FDIC can issue filings for each institution in may rely on the exemption for a period case-by-case exemptions, a situation combination with FinCEN’s of time to be communicated by the FDIC could arise in which FinCEN grants an methodology for estimating costs in its granting of the exemption, which exemption from SAR filing associated with SAR filings.14 The may be indefinite. requirements to an FDIC-supervised annualized estimated recordkeeping, institution that has developed D. Part 353.3(d)(5) reporting, and disclosure costs of filing innovative methods for meeting SAR SARs in the second quarter of 2020 do The proposed paragraph (d)(5) would filing requirements, but the institution not represent more than 1.9 percent of permit the FDIC to revoke or extend the would still need to file a SAR. The annual non-interest expense for any period of time for an exemption granted proposed rule would allow the FDIC to FDIC-supervised institution. under paragraph (d)(3). Under the grant exemptions from SAR filing Additionally, only one FDIC-supervised proposed paragraph (d)(5), the FDIC requirements in conjunction with institution incurred estimated would have discretion to revoke FinCEN to reduce potential regulatory annualized recordkeeping, reporting, exemptions. The proposed paragraph burden. and disclosure costs associated with (d)(5) would require the FDIC to provide The FDIC does not have the ability to SAR filing that amounted to more than written notice to the FDIC-supervised forecast the number of requests for 5 percent of annual wage and salary institution of the FDIC’s intention to exemptions that FDIC-supervised expense with the costs equaling 5.2 revoke an exemption. The proposed institutions will file as a result of this percent.15 Therefore, the economic paragraph (d)(5) would require the rule, or the number of requests that the benefit of this proposed rule on FDIC- written notice to include the basis for FDIC will grant. The proposed rule is supervised institutions is likely to be the revocation and provide the FDIC- likely to pose some increase in relatively small. Further, this proposed supervised institution an opportunity to compliance costs associated with rule would only allow the FDIC to grant respond. The proposed paragraph (d)(5) submitting an exemption request to the exemptions in instances where safety would require the FDIC to consider the FDIC, however the FDIC believes that and soundness and Bank Secrecy Act institution’s response before deciding to the costs are likely to be small. The regulatory requirements would not be revoke an exemption. The proposed FDIC expects this proposed rule will compromised, so the proposed rule is paragraph (d)(5) would require the FDIC result in cost savings for FDIC- also not expected to have any broader to notify, in writing, the FDIC- supervised institutions that obtain negative economic impacts. supervised institution of the FDIC’s exemptions from SAR filing The FDIC invites comments on all final decision to revoke an exemption. requirements. However, the cost savings aspects of this analysis. In particular, are projected to be relatively modest. IV. Summary would the proposed rule have any costs For example, using the methodology for or benefits to covered entities that the If the proposal is finalized, 12 CFR calculating the cost associated with FDIC has not identified? 353.3(d) would be amended to add filing SARs that FinCEN published in paragraphs (d)(3) through (5), and May 2020,12 the FDIC estimates that VI. Alternatives would apply to all FDIC-supervised FDIC-supervised institutions incurred The FDIC has considered alternatives institutions. These initiatives would roughly $3.8 million 13 in costs in the to the proposed rule but believes that permit the FDIC to grant SAR the proposed amendments represent the exemptions to FDIC-supervised 12 See 85 FR 31598 (May 26, 2020). most appropriate option for covered institutions to promote innovation, 13 This estimate uses the May 2019 75th institutions. As discussed earlier, reduce burden, and meet BSA percentile hourly wage rate for Financial Managers ($73.48), Compliance Officers ($43.70), Financial requirements more efficiently and Clerks ($18.20), and Tellers ($17.49) reported by the percentage of SARs that contain extended content effectively. Bureau of Labor Statistics, National Industry- matches what FinCEN reported in its recent Specific Occupational Employment, and Wage estimates of the costs associated with SAR filing V. Expected Effects Estimates. These wage rates have been adjusted for requirements (85 FR 31598). changes in the Consumer Price Index for all Urban 14 FDIC analysts queried data on SAR filings by As explained previously, the Consumers between May 2019 and June 2020 (0.67 institution from a SAR database that FinCEN makes proposed rule would amend 12 CFR percent) and grossed up by 51 percent to account available to regulators and law enforcement 353.3(d) to add paragraphs (d)(3) for non-monetary compensation as reported by the agencies. through (5), and would apply to all June 2020 Employer Costs for Employee 15 This estimate uses FinCEN data on the SAR Compensation Data. The mix of professions varies filings of each FDIC-supervised institution, in FDIC-supervised institutions. As of June depending on the task associated with filing SARs combination with FinCEN’s methodology for 30, 2020, the FDIC supervised 3,270 including reviewing alerts, documenting reasons estimating costs associated with SAR filings, to institutions.11 The proposal would why some alerts do not merit a SAR filing, drafting, estimate the SAR-related costs that each FDIC- permit the FDIC to grant relief to FDIC- writing, and submitting SARs, and storing SARs supervised institution incurred in the second and supporting documentation. For this calculation quarter of 2020. That estimate is then multiplied by supervised institutions that leverage the FDIC assumed that the mix of professions four, and compared to each institution’s previous involved in each task, the percentage of SAR alerts four quarters of merger-adjusted noninterest 11 FDIC-supervised institutions are set forth in 12 that result in a SAR filing, and the percentage of expense and wages and salary expense reported in U.S.C. 1813(q)(2). SARs that are batch filed or filed discretely, and the Call Report filings from September 2019–June 2020.

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FinCEN has statutory authority to grant Frequency of Response: On Occasion. impact of the proposed rule on small relief from SAR filing requirements to Affected Public: Businesses or other entities.16 However, a regulatory FDIC-supervised institutions, and this for-profit. flexibility analysis is not required if the proposed rule would amend the FDIC’s Respondents: Any FDIC-supervised agency certifies that the rule will not regulations so that the FDIC may issue institution wishing to obtain an have a significant economic impact on exemptions to SAR filing requirements exemption from the Suspicious Activity a substantial number of small entities, in conjunction with FinCEN. This Report requirements. and publishes its certification and a change could reduce regulatory burden Estimated Number of Annual short explanatory statement in the for FDIC-supervised institutions by Respondents: 3. Federal Register together with the rule. allowing institutions that develop Estimated Burden per Response: 8 The Small Business Administration innovative techniques for meeting BSA hours. (SBA) has defined ‘‘small entities’’ to requirements to obtain exemptions from Total estimated annual burden: 24 include banking organizations with total SAR filing requirements. The FDIC hours. assets of less than or equal to $600 To derive these estimates, the FDIC considered maintaining its regulations million.17 Generally, the FDIC considers assumed that the FDIC-supervised in their current form, but chose not to a significant effect to be a quantified institutions that file the most SARs will do so because the FDIC believes that effect in excess of 5 percent of total be the most likely to request exemptions doing so would be unnecessarily annual salaries and benefits per from SAR filing requirements. There are burdensome and may discourage institution, or 2.5 percent of total ten FDIC-supervised institutions that institutions from developing innovative noninterest expenses. The FDIC believes filed 1,000 or more SARs in the second approaches to meeting BSA that effects in excess of these thresholds quarter of 2020. The FDIC expects requirements. typically represent significant effects for roughly one-third of those institutions FDIC-supervised institutions. For the VII. Request for Comments to request an exemption per year, so the reasons provided below, the FDIC The FDIC invites comments on all FDIC expects 3 annual respondents to certifies that the proposed rule would aspects of this proposed rulemaking. In this information collection. The FDIC not have a significant economic impact particular, the FDIC requests comments estimates the hourly burden of an on a substantial number of small on the following questions: exemption request to be 8 hours. banking organizations. Accordingly, a Question 1. The FDIC invites Comments are invited on: (a) Whether regulatory flexibility analysis is not comments on the proposed exemptions the collection of information is required. to 12 CFR 353.3. necessary for the proper performance of As of June 30, 2020, the FDIC Question 2. The FDIC invites the FDIC’s functions, including whether supervised 3,270 institutions,18 of comments on whether any additional the information has practical utility; (b) which 2,492 are considered small detail relating to the procedures that the accuracy of the estimates of the entities for the purposes of RFA.19 Using would be followed in considering, burden of the information collection, the methodology for calculating the cost granting, or revoking exemptions are including the validity of the associated with filing SARs that FinCEN necessary. methodology and assumptions used; (c) published in May 2020,20 the FDIC Written comments must be received ways to enhance the quality, utility, and estimates that small FDIC-supervised by the FDIC no later than February 22, clarity of the information to be institutions incurred $460,565.08 21 in 2021. collected; (d) ways to minimize the burden of the information collection on 16 5 U.S.C. 601, et seq. VIII. Administrative Law Matters respondents, including through the use 17 The SBA defines a small banking organization A. The Paperwork Reduction Act of automated collection techniques or as having $600 million or less in assets, where ‘‘a other forms of information technology; financial institution’s assets are determined by Certain provisions of the proposed averaging the assets reported on its four quarterly and (e) estimates of capital or start-up financial statements for the preceding year.’’ See 13 rule contain ‘‘collection of information’’ costs and costs of operation, CFR 121.201 (as amended by 84 FR 34261, effective requirements within the meaning of the maintenance, and purchase of services August 19, 2019). ‘‘SBA counts the receipts, Paperwork Reduction Act (PRA) of 1995 to provide information. employees, or other measure of size of the concern (44 U.S.C. 3501–3521). In accordance All comments will become a matter of whose size is at issue and all of its domestic and foreign affiliates.’’ See 13 CFR 121.103. Following with the requirements of the PRA, the public record. Comments on aspects of these regulations, the FDIC uses a covered entity’s FDIC may not conduct or sponsor, and this notice that may affect reporting or affiliated and acquired assets, averaged over the the respondent is not required to recordkeeping requirements and burden preceding four quarters, to determine whether the respond to, an information collection estimates should be sent to the FDIC-supervised institution is ‘‘small’’ for the unless it displays a currently valid purposes of RFA. addresses listed in the ADDRESSES 18 FDIC-supervised institutions are set forth in 12 Office of Management and Budget section of this preamble. A copy of the U.S.C. 1813(q)(2). (OMB) control number. The information comments may also be submitted to the 19 Call Report data, March 2020. collection requirements contained in FDIC OMB desk officer by mail to U.S. 20 See 85 FR 31598. this notice of proposed rulemaking have Office of Management and Budget, 725 21 This estimate uses the May 2019 75th been submitted to OMB for review and 17th Street NW, #10235, Washington, percentile hourly wage rate for Financial Managers ($73.48), Compliance Officers ($43.70), Financial approval by FDIC under section 3507(d) DC 20503 or by facsimile to 202–395– Clerks ($18.20), and Tellers ($17.49) reported by the of the PRA and § 1320.11 of OMB’s 5806, Attention, Federal Banking Bureau of Labor Statistics, National Industry- implementing regulations (5 CFR part Agency Desk Officer. Specific Occupational Employment, and Wage 1320) as a new information collection. Estimates. These wage rates have been adjusted for B. The Regulatory Flexibility Act changes in the Consumer Price Index for all Urban The proposed rule contains voluntary Consumers between May 2019 and June 2020 (0.67 reporting requirements, or exemption The Regulatory Flexibility Act (RFA), percent) and grossed up by 51 percent to account requests, in 12 CFR 353.3(d)(3). requires that, in connection with a for non-monetary compensation as reported by the Title of Proposed Information notice of proposed rulemaking, an June 2020 Employer Costs for Employee Compensation Data. The mix of professions varies Collection: Exemptions to Suspicious agency prepare and make available for depending on the task associated with filing SARs Activity Report Requirements. public comment an initial regulatory including reviewing alerts, documenting reasons OMB Control Number: 3064—[NEW]. flexibility analysis that describes the why some alerts do not merit a SAR filing, drafting,

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costs in the second quarter of 2020 requirements would not be impose additional reporting, disclosure, related to reviewing alerts, documenting compromised, so the proposed rule is or other requirements on insured the reasons why certain alerts do not also not expected to have any broader depository institutions (IDIs), each merit a SAR filing, and drafting, writing, negative economic impacts. federal banking agency must consider, submitting, and storing SAR filings and Based on the information above, the consistent with principles of safety and documentation, which amounts to FDIC certifies that the rule would not soundness and the public interest, any annual estimated costs of $1,842,260.32 have a significant economic impact on administrative burdens that the for small FDIC-supervised institutions a substantial number of small entities. regulations would place on depository in aggregate. The FDIC invites comments on all institutions, including small depository The FDIC estimated costs of filing aspects of the supporting information institutions, and customers of SARs for each FDIC-supervised provided in this section, and in depository institutions, as well as the institution in the second quarter of 2020 particular, whether the proposed rule benefits of the regulations. In addition, using data on SAR filings for each would have any significant effects on section 302(b) of RCDRIA requires new institution in combination with small entities that the FDIC has not regulations and amendments to FinCEN’s methodology for estimating identified. regulations that impose additional 22 costs associated with SAR filings. The C. Plain Language reporting, disclosures, or other new annualized estimated recordkeeping, requirements on IDIs generally to take reporting, and disclosure costs of filing Section 722 of the Gramm-Leach- 24 effect on the first day of a calendar SARs in the second quarter of 2020 do Bliley Act requires the federal quarter that begins on or after the date not represent more than 1.9 percent of banking agencies to use plain language on which the regulations are published in all proposed and final rules annual non-interest expense for any in final form.28 The FDIC invites published after January 1, 2000. The small FDIC-supervised institution. comments that further will inform its FDIC has sought to present the proposed Additionally, only one small FDIC- consideration of RCDRIA. supervised institution incurred rule in a simple and straightforward estimated annualized costs associated manner. The FDIC invites comments on List of Subjects in 12 CFR Part 353 with SAR filing that amounted to more whether the proposal is clearly stated Banks, banking, Crime, Reporting and than 5 percent of annual wage and and effectively organized, and how the recordkeeping requirements. FDIC might make the proposal easier to salary expense with the costs equaling Authority and Issuance 5.2 percent.23 While the total estimated understand. costs of filing SARs represent a D. The Economic Growth and For the reasons stated in the significant expense for one FDIC- Regulatory Paperwork Reduction Act preamble, the Federal Deposit Insurance supervised small entity, the costs do not Corporation proposes to amend 12 CFR Under section 2222 of the Economic part 353 as follows: represent a significant amount for all Growth and Regulatory Paperwork other FDIC-supervised small entities. Reduction Act of 1996 (EGRPRA), the PART 353—SUSPICIOUS ACTIVITY Thus, the cost savings from this FDIC is required to review all of its REPORTS proposal for all other FDIC-supervised regulations, at least once every 10 years, small entities will likely not be in order to identify any outdated or ■ 1. The authority citation for part 353 significant. In addition, the cost savings otherwise unnecessary regulations continues to read as follows: from receiving a SAR exemption would 25 imposed on insured institutions. The Authority: 12 U.S.C. 1818, 1819; 31 U.S.C. be at least partially offset by the costs FDIC, along with the other federal 5318. associated with requesting an banking agencies, submitted a Joint ■ exemption and the costs associated with Report to Congress on March 21, 2017 2. Revise § 353.3 paragraph (d) to read developing a method for meeting SAR (EGRPRA Report) discussing how the as follows: requirements. Further, this proposed review was conducted, what has been § 353.3 Reports and records. rule would only allow the FDIC to grant done to date to address regulatory * * * * * exemptions in instances where safety burden, and further measures the FDIC and soundness and BSA regulatory (d) Exemptions. (1) An FDIC- will take to address issues that were supervised institution need not file a identified.26 By providing the ability to writing, and submitting SARs, and storing SARs suspicious activity report for a robbery issue exemptions and reduce burdens or burglary committed or attempted, and supporting documentation. For this calculation on FDIC-supervised institutions, this the FDIC assumed that the mix of professions that is reported to appropriate law involved in each task, the percentage of SAR alerts rule complements other actions that the enforcement authorities. that result in a SAR filing, and the percentage of FDIC has taken, separately and with the (2) An FDIC-supervised institution SARs that are batch filed or filed discretely, and the other federal banking agencies, to need not file a suspicious activity report percentage of SARs that contain extended content further the EGRPRA mandate. matches what FinCEN reported in its recent for lost, missing, counterfeit, or stolen estimates of the costs associated with SAR filing E. Riegle Community Development and securities if it files a report pursuant to requirements (85 FR 31598). the reporting requirements of 17 CFR 22 Regulatory Improvement Act of 1994 FDIC analysts queried data on SAR filings by 240.17f–1. institution from a SAR database that FinCEN makes Pursuant to section 302(a) of the (3) The FDIC may exempt any FDIC- available to regulators and law enforcement Riegle Community Development and agencies. supervised institution from the Regulatory Improvement Act 23 This estimate uses FinCEN data on the SAR requirements of this section. Upon (RCDRIA),27 in determining the effective filings of each FDIC-supervised institution, in receiving a written request from an combination with FinCEN’s methodology for date and administrative compliance FDIC-supervised institution, the FDIC estimating costs associated with SAR filings, to requirements for new regulations that estimate the SAR-related costs that each FDIC- will determine whether the exemption supervised institution incurred in the second is consistent with safe and sound 24 Public Law 106–102, section 722, 113 Stat. quarter of 2020. That estimate is then multiplied by banking and may consider other four, and compared to each institution’s previous 1338, 1471 (1999). four quarters of merger-adjusted noninterest 25 Public Law 104–208, 110 Stat. 3009 (1996). appropriate factors. The FDIC will also expense and wages and salary expense reported in 26 82 FR 15900 (March 31, 2017). Call Report filings from June 2019 to March 2020. 27 12 U.S.C. 4802(a). 28 Id.

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seek FinCEN’s determination whether NATIONAL CREDIT UNION Attorney, Damon P. Frank, Staff the exemption is consistent with the ADMINISTRATION Attorney, and Chrisanthy J. Loizos, purposes of the BSA, if applicable. The Senior Staff Attorney, Office of General exemption shall be applicable only as 12 CFR Part 748 Counsel, (703) 518–6540; or by mail at expressly stated in the exemption, may RIN 3133–AF25 National Credit Union Administration, be conditional or unconditional, may 1775 Duke Street, Alexandria, VA apply to particular persons or to classes Bank Secrecy Act 22314. of persons, and may apply to SUPPLEMENTARY INFORMATION: AGENCY: National Credit Union transactions or classes of transactions. Administration (NCUA). I. Introduction The FDIC will seek FinCEN’s ACTION: Proposed rule. Requirements related to SARs are concurrence with regard to any codified in 12 CFR 748.1(c). This exemption request that also requires an SUMMARY: The NCUA Board (Board) is section of the NCUA’s regulations exemption from FinCEN’s SAR inviting comment on a proposed rule requires FICUs to file SARs under regulation, and may consult with that would modify the requirements for certain conditions. In addition, this FinCEN regarding other exemption federally insured credit unions (FICUs) section provides for: (i) Board of requests. The FDIC also may consult to file Suspicious Activity Reports director or other committee notification; with the other state and federal banking (SARs). The proposed rule would (ii) filing exceptions; (iii) SAR agencies before granting any exemption. amend the NCUA’s SARs regulation to confidentiality; (iv) recordkeeping allow the Board to issue exemptions (4) The FDIC will provide a written requirements; (v) supporting from the requirements of that regulation documentation requirements; and (vi) response to the FDIC-supervised in order to grant relief to FICUs that institution that submitted the exemption limitations on liability. The proposed develop innovative solutions to meet rule would allow the NCUA to issue request after considering whether the the requirements of the Bank Secrecy exemption is consistent with safe and exemptions from the regulation’s SAR Act (BSA). requirements. sound banking, consulting with the DATES: Comments must be received by appropriate agencies, and seeking February 22, 2021. II. Background concurrence when appropriate. An ADDRESSES: You may submit written The NCUA’s original SARs regulation FDIC-supervised institution that has comments, identified by RIN 3133– required FICUs to report potential received an exemption under paragraph AF25, by any of the following methods violations of law arising from (d)(3) of this section may rely on the (Please send comments by one method transactions that flow through those exemption for a period of time to be only): institutions.1 As discussed in more communicated by the FDIC in its • Federal eRulemaking Portal: http:// detail later in this document, this granting of the exemption, which may www.regulations.gov. Follow the regulation has been amended and be indefinite. instructions for submitting comments. updated since its inception. The (5) The FDIC may extend the period • Fax: (703) 518–6319. Include NCUA’s purpose for the regulation has, of time or may revoke an exemption ‘‘[Your Name]—Comments on Proposed however, remained unchanged because granted under paragraph (d)(3) of this Rule: Bank Secrecy Act’’ in the fraud, abusive insider transactions, check-kiting schemes, money section. Exemptions may be revoked at transmittal. • laundering, and other financial crimes the sole discretion of the FDIC. The Mail: Address to Melane Conyers- can pose serious threats to a financial FDIC will provide written notice to the Ausbrooks, Secretary of the Board, National Credit Union Administration, institution’s continued viability and, if FDIC-supervised institution of the unchecked, can undermine the public FDIC’s intention to revoke an 1775 Duke Street, Alexandria, Virginia 22314–3428. confidence in the nation’s financial exemption. The notice will include the • Hand Delivery/Courier: Same as services industry generally.2 basis for the revocation and will provide mail address. In 1992, Congress passed the an opportunity for the FDIC-supervised Public Inspection: You may view all Annunzio-Wylie Anti-Money institution to submit a response to the public comments on the Federal Laundering Act (the Anti-Money FDIC. The FDIC will consider the eRulemaking Portal at http:// Laundering Act), which redesigned the response prior to deciding whether or www.regulations.gov as submitted, criminal referral process applicable to not to revoke an exemption, and will except for those we cannot post for credit unions and made the reporting of notify the FDIC-supervised institution of technical reasons. The NCUA will not certain suspicious transactions a the FDIC’s final decision to revoke an edit or remove any identifying or requirement of the BSA.3 The Anti- exemption in writing. contact information from the public Money Laundering Act permitted the * * * * * comments submitted. Due to social Department of the Treasury to require distancing measures in effect, the usual financial institutions, including credit Federal Deposit Insurance Corporation. opportunity to inspect paper copies of unions, to ‘‘report any suspicious By order of the Board of Directors. comments in the NCUA’s law library is transaction relevant to a possible Dated at Washington, DC, on December 15, not currently available. After social violation of law or regulation.’’ 4 2020. distancing measures are relaxed, visitors 1 James P. Sheesley, may make an appointment to review See 50 FR 53294–01 (Dec. 31, 1985). 2 paper copies by calling (703) 518–6540 58 FR 5663 (Jan. 22, 1993). Assistant Executive Secretary. 3 Public Law 102–550, 106 Stat. 3672, 4059 [FR Doc. 2021–00037 Filed 1–21–21; 8:45 am] or emailing [email protected]. (1992). 4 BILLING CODE 6714–01–P FOR FURTHER INFORMATION CONTACT: 31 U.S.C. 5318(g)(1). The quoted text is from Policy and Analysis: Timothy Segerson, section 1517 of the Annunzio-Wylie Anti-Money Laundering Act, which was originally codified at 31 Deputy Director, Office of Examination U.S.C. 5314(g). The text was moved as part of the and Insurance, (703) 518–6397; Violent Crime Control and Law Enforcement Act of Legal:Justin Anderson, Senior Staff 1994.

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