OCC Modifies SAR Requirements

The OCC recently published a final rule modifying the requirement for filing suspicious activity reports (SARs).  In January 2021 the OCC issued a Notice of Proposed Rulemaking (NPRM) to allow the OCC to grant SAR filing exemptions similar to the SAR filing exemptions granted by FinCEN under their own regulations.  This final rule will also make it possible for the OCC to facilitate changes required by the Anti-Money Laundering Act of 2020.  The changes proposed in the NPRM were adopted in the final rule largely as proposed.  The effective date of the final rule is May 1, 2022.

Suspicious activity reporting is addressed in the Bank Secrecy Act regulations published by FinCEN, the FDIC, the FRB, and the OCC.  The SAR regulations published by these four agencies are substantially similar, with the ones published by the regulators (FDIC, FRB and OCC) being slightly broader in scope and requiring SARs to be filed for instances of insider abuse as well as requiring the institution's board of directors to be notified when a SAR has been filed.  Regardless of who an institution’s federal regulator is, every institution is subject to both their regulator’s SAR regulations, as well as FinCEN’s SAR regulations.  

The OCC’s final rule adds a paragraph (m) to 12 CFR 21.11, and can be summarized as follows:

Paragraph (m) section 1 requires banks to submit written requests to their regulator for SAR exemptions.  The OCC will evaluate the request and consult with FinCEN to verify that the bank’s request is consistent with the purposes of the Bank Secrecy Act.  If the bank is seeking an exemption from both OCC regulations and FinCEN regulations, the bank must send a request to both the OCC and FinCEN to receive an exemption from both regulations.

Paragraph (m) section 2 requires the OCC to provide the requesting bank with written response to their request.  If a request for an exemption is granted the OCC must communicate the duration of the exemption.

Paragraph (m) section 3 allows the OCC, through written notice, to revoke or extend the duration of the exemption.  A notice of revocation must include the OCC’s basis for revoking the exemption and provide the bank an opportunity to respond.  The OCC must also consider the bank’s response to the notice of revocation before revoking an exemption, and if the OCC decides, after consideration, to revoke the exemption, their decision must be communicated in writing to the bank.

Paragraph (m) section 4 indicates that banks that receive exemptions from both the OCC and FinCEN regulations will be relieved from the requirements of the SAR regulations, to the extent that the exemption provides relief from those requirements.