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As we noted in a client alert late last week, the federal banking agencies released on August 13, 2020, a joint statement on enforcement of Bank Secrecy Act/Anti-Money Laundering (“BSA/AML”) requirements.  At the time, the Federal Deposit Insurance Corporation made reference to a possible separate “Statement on Enforcement of the Bank Secrecy Act” from FinCEN.  FinCEN released that statement earlier today.  We summarize below three key takeaways from the FinCEN statement:
  1. The FinCEN statement asserts (emphasis added) that:  “When FinCEN takes an enforcement action, it will seek to establish a violation of law based on applicable statutes and regulations.  FinCEN will not treat noncompliance with a standard of conduct announced solely in a guidance document as itself a violation of law.”  The underlined sentence reflects a position on the role of guidance that other agencies have also emphasized in recent years.  But, given a number of FinCEN regulations are quite high-level and have been extensively interpreted in the FFIEC BSA/AML Manual and other guidance, it remains to be seen how FinCEN will apply the underlined sentence in practice.
  2. The FinCEN statement lists the types of actions FinCEN may take in light of an identified violation, including an informal “warning letter” for less serious violations (i.e., in lieu of a cease and desist order or civil money penalty).
  3. The FinCEN statement identifies the factors FinCEN will consider in determining the appropriate disposition of an AML violation.  Those factors are generally what one would expect — e.g., the pervasiveness, seriousness and practical effects of the violation; the institution’s self-identification, disclosure, and cooperation in connection with the violation (or lack thereof); the institution’s history of prior violations; and actions taken by other agencies with overlapping jurisdiction, including bank regulators.

The full text of the FinCEN statement is available here.

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Photo of Nikhil Gore Nikhil Gore

Nikhil V. Gore is a partner in Covington’s financial services and arbitration practices, representing sovereigns, financial institutions, and global corporations in civil and criminal investigations, as well as cross-border arbitrations and disputes.

In his financial services investigations and enforcement practice, Nikhil leads anti-financial…

Nikhil V. Gore is a partner in Covington’s financial services and arbitration practices, representing sovereigns, financial institutions, and global corporations in civil and criminal investigations, as well as cross-border arbitrations and disputes.

In his financial services investigations and enforcement practice, Nikhil leads anti-financial crime investigations, as well as a wide range of financial institution governance, control, safety and soundness, and consumer and market conduct matters. He was lead counsel for a global bank in its recent trade surveillance resolutions with U.S. bank regulators, represented another global financial institution in successfully navigating multi-year criminal and civil investigations concerning an alleged corruption scheme in Asia, and has represented regional and community banks across the country in contesting and negotiating supervisory and enforcement outcomes before the OCC, Federal Reserve, and FDIC. He also counsels clients on BSA/AML regulations, and the structure and functioning of their control, compliance, and audit frameworks.

In his disputes practice, Nikhil is part of the Covington team representing Ukraine in state-to-state arbitrations against the Russian Federation and was appointed by the Prosecutor-General of Ukraine to the Legal Task Force on Accountability for Russian War Crimes. He regularly handles treaty arbitrations and commercial disputes spanning Asia, Eastern Europe, North America, the Middle East, and Africa.