Banking, credit union regulators’ proposed SAR exemption rules have Feb. 22 comment deadline

Financial institution regulatory agencies’ proposals for allowing certain exemptions from the requirement to submit suspicious activity reports (SARs) under the Bank Secrecy Act (BSA) were published Thursday in the Federal Register with a public comment deadline of Feb. 22.

The proposed rules are similar but were published individually by the Federal Deposit Insurance Corp. (FDIC), Federal Reserve, National Credit Union Administration (NCUA), and Office of the Comptroller of the Currency (OCC).

[The proposed rules’ publication occurred two days following a memorandum from the Biden administration directing all federal agencies and departments to generally hold off from issuing rules, or publishing the in the Federal Register, pending further review, unless those come from a Biden administration appointee. That would suggest the proposals published Thursday may have to be withdrawn. That memorandum does note exceptions, however, where rules may not have a material impact or where an agency receives some other dispensation following consultation with the Office of Management and Budget (OMB). There is also the question whether that memorandum will apply to, or be honored by, independent agencies.]

Briefly, the agencies said the proposed rules would make it possible for them to provide exemptions from the SAR requirements for institutions that develop innovative solutions intended to meet BSA requirements more efficiently and effectively. The proposals are in line with a statement issued by the regulators encouraging institutions to seek such innovative solutions.

The agencies also note that the proposals bring their rules a bit more in line with those of Treasury’s Financial Crimes Enforcement Network (FinCEN); however, they note that an exemption from one of the prudential regulators would not relieve an institution from an independent obligation to comply with FinCEN’s SAR regulations, “if applicable.”

FDIC Federal Register notice

Federal Reserve notice in Federal Register

NCUA Federal Register notice

OCC Federal Register notice

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