FinCEN, writing lawmakers, says it ‘should plan towards’ a no-action letter process for AML/CFT matters

Without offering a specific timetable for implementing one, Treasury’s financial crimes enforcement unit told Congress Monday that a no-action letter process “would be a useful complement” to its current forms of regulatory guidance and relief” and that it has concluded it should “plan towards” a rulemaking to establish such a process.

The letter, from Financial Crimes Enforcement Network (FinCEN) Acting Director Michael Mosier, went Monday to the Senate Banking Committee and House Financial Services Committee and was announced in an agency release Wednesday.

FinCEN issued its report under the Anti-Money Laundering Act of 2020.

FinCEN conducted an assessment of whether to establish a process for the issuance of no-action letters under section 6305 of the Anti-Money Laundering Act of 2020. The assessment addressed whether there should be a no-action letter process to address the application of anti-money laundering (AML) or countering the financing of terrorism (CFT) laws and regulations to specific conduct.

A no-action letter, the agency explained, is generally understood to be a form of enforcement discretion where an agency states by letter that it will not take an enforcement action against the submitting party for the specific conduct presented to the agency.

“In conducting the assessment, FinCEN analyzed various issues, including a timeline for the process for FinCEN to reach a final decision, in consultation with the relevant Federal functional regulators, to a request for a no-action letter; whether improvements in current processes are necessary; and whether a formal no-action process would help to mitigate or accentuate illicit finance risks in the United States,” it said.

The agency, in its report, concluded that it should plan for a rulemaking to create a process for issuing no-action letters in addition to its current forms of regulatory guidance and relief, “with the timing subject to resource limitations and competing priorities.”

Whenever work does begin on such a rule, FinCEN, in its report, said it anticipates a no-action letter process would generally require the following steps, “not necessarily in this order”:

  1. FinCEN receives a request for a no-action letter and performs an initial review of the request, including for completeness, accuracy, and conformity with relevant rules and regulations FinCEN puts in place for no-action letter requests.
  2. FinCEN determines the relevant regulators or agencies (including State or other regulators) that also regulate the entity and may have an interest in the request, and FinCEN shares the request.
  3. FinCEN consults internally on the request.
  4. FinCEN consults with the appropriate regulators, departments, and agencies on the request.
  5. FinCEN makes a final decision on the request.
  6. FinCEN drafts the no-action letter, denial, or other response and transmits it to the submitting party.
  7. FinCEN may elect to post the no-action letter on its website.

“The timeline for a no-action letter process could vary depending on a number of different factors, including the complexity and nature of the request. Based on feedback from the Consulting Parties the timeline could be as short as 90 to 120 days for cases that do not present novel, complex, or sensitive issues, but other cases could take considerably longer,” the report states. “For example, both the SEC and CFTC indicated that issuance of their no-action letters can take between several months to over a year, depending on the complexity of the issue underlying the request.”

Release: FinCEN Completes Assessment on the Use of No-Action Letters

Report to Congress