As part of the Anti-Money Laundering Act of 2020 FinCEN was authorized to expand the administrative rulings and exceptive/exemptive relief they currently offer to third parties to include “no-action letters.” Recently, FinCEN issued an advance notice of proposed rulemaking seeking the public’s comments related to the implementation of a no-action letter process and whether such a no-action letters are necessary.
For these purposes, an administrative ruling is a written ruling issued by FinCEN that interprets the BSA regulations found at 31 C.F.R. Chapter X, in light of individual situations for which an administrative ruling has been requested. These administrative rulings are binding if they describe an actual real-life situation an institution is facing. In addition, if FinCEN makes an administrative ruling available to the public, other third parties may also rely on the ruling as if they were the party which requested the ruling. However, if FinCEN does not publish an administrative ruling, it may not be relied upon by anyone other than the third party that requested the ruling.
In addition to administrative rulings, FinCEN may also grant an exception or exemption from regulatory requirements. These relief exceptions or exemptions may be conditional or unconditional, may apply to certain persons or classes of persons, and may apply to certain transactions or classes of transactions. These exceptions or exemptions are only applicable as expressly stated in the order from FinCEN and may be revoked by FinCEN, at their sole discretion.
With this advanced notice of proposed rulemaking, FinCEN is proposing to add a “no-action letter” to the existing guidance and relief. No-action letters are currently used by other agencies to indicate that an agency does not intend to take or recommend enforcement action. As envisioned by FinCEN, the “no-action letter” proposed would be provided in response to a third-party submission. For example, in their submission, a financial institution would detail actions being considered by the institution which have not yet taken. The institution in this scenario is seeking an indication from FinCEN that the proposed action / conduct would not prompt enforcement action by FinCEN.
In the advanced notice of proposed rulemaking, FinCEN poses 48 questions to be considered, ranging from the process by which these letters would be requested and issued, to FinCEN’s jurisdiction, to potential confidentiality concerns. Since the addition of a no-action letter process may affect other forms of regulatory guidance and relief FinCEN is additionally seeking input on whether a no-action letter process should be implemented at all, and how the process should interact with existing forms of relief. Comments are due on or before August 5, 2022.