CUNA Comment Letter

Proposed Interpretive Guidance on sharing Suspicious Activity Reports by Depository Institutions with Certain U.S. Affiliates

June 8, 2009

Financial Crimes Enforcement Network
Department of Treasury
Post Office Box 39v Vienna, Virginia 22183

RE: TREAS-FinCEN-2008-0022, Proposed Interpretive Guidance on sharing Suspicious Activity Reports by Depository Institutions with Certain U.S. Affiliates

To Whom It May Concern:

The Credit Union National Association (CUNA) appreciates the opportunity to comment on the Financial Crimes Enforcement Network’s (FinCEN’s) proposed interpretative guidance on the ability of depository institutions to share Suspicious Activity Reports (SARs) or information revealing the existence of a SAR (“SAR information”) with certain U.S. affiliates. By way of background, CUNA represents approximately 90 percent of our nation’s 8,000 state and federal credit unions, which serve about 92 million members. CUNA is also filing a letter with FinCEN on the SAR confidentiality proposed rule.

Summary of CUNA’s Comments

Discussion

The proposed guidance interprets the general statement in the proposed SAR confidentiality rules that a depository institution may share a SAR or SAR information within its corporate organizational structure for purposes that are consistent with Title II of the BSA. The interpretative guidance makes clear that the January 2006 guidance issued to depository institutions, which provided for the sharing of a SAR or SAR information by a depository institution with its head office or controlling company, is still applicable. The interpretative guidance also explains that the proposed SAR confidentiality regulations may be interpreted to permit a depository institution to share a SAR or SAR information with certain affiliates subject to SAR regulations.

CUNA generally supports FinCEN’s interpretation of the permissible sharing of SARs or SAR information under the proposed SAR confidentiality rules. We agree the guidance takes steps to remove unnecessary obstacles to detecting and reporting suspicious activity. We also agree that such sharing within the corporate structure aids a financial institution in its goal of enterprise-wide compliance with the BSA while ensuring the confidentiality of a SAR or SAR information. Importantly, FinCEN’s interpretation takes into consideration the global nature of depository institutions today and provides those institutions with the flexibility to implement BSA compliance in a real-world environment.

However, CUNA encourages FinCEN to adopt a more generous interpretation of the SAR confidentiality rules as it pertains to a depository institution’s ability to share a SAR or SAR information with its foreign branches when appropriate. Currently, the proposed guidance limits the sharing of SARs or SAR information to U.S. affiliates subject to SAR rules. The guidance goes on to note that foreign branches of U.S. banks or credit unions are considered to be “foreign banks” for purposes of the BSA and would not be considered affiliates subject to SAR regulation. As a result, a U.S. based bank or credit union would not be able to share this information with its foreign branches. We believe that in some instances, the sharing of a SAR or SAR information with a foreign branch will assist depository institutions in their goal of promoting enterprise-wide BSA compliance. Some credit unions, such as those serving the military or diplomatic corps or other international groups, would benefit from this type of information sharing. In addition, allowing a depository institution to share this information with foreign branches may assist in the overall goal of detecting and reporting money laundering and terrorist financing within the institution on a global scale.

CUNA understands the importance of maintaining SAR confidentiality and that doing so may become a more arduous task when this information is shared outside of U.S. jurisdiction and possibly subjected to foreign law. However, we believe that the risk of disclosure of a SAR filing or SAR information would be no greater under these circumstances than under the January 2006 guidance, which allows sharing between U.S. branches of a foreign bank or a U.S. bank or credit union and its foreign-based head offices or controlling companies.

We understand the rationale underlying the 2006 guidance and the importance of allowing a depository institution to share SARs or SAR information with its head office or controlling company to assist in enterprise-wide compliance with the BSA, as well as helping the institution detect and thwart money laundering and terrorist financing internally on a global scale. However, we believe that allowing a similar flow of information between a depository institution and its foreign branch is equally important in achieving these goals.

For these reasons, CUNA recommends that FinCEN not issue a blanket prohibition against SAR and SAR information sharing with certain foreign affiliates. Rather, FinCEN should engage the financial sector in further discussions on this issue to determine if there are additional steps that can be taken to minimize the risks of cross-border information sharing between depository institutions and their foreign branches. It would be beneficial if such dialogue could address issues such as how electronic information transmittal (such as encrypted sharing) could permit cross-border sharing but minimize the risks of unwanted disclosure.

Thank you for the opportunity to comment on the interpretive guidance. If you have any questions about our comments, please do not hesitate to contact Senior Vice President and Deputy General Counsel Mary Dunn or me at (202) 638-5777.

Sincerely,

Nichole Seabron
Federal Compliance Counsel