FinCEN Statement on Bank Secrecy Act (BSA) & FBAR 

FinCEN Statement on Bank Secrecy Act (BSA) & FBAR

FinCEN Statement on Bank Secrecy Act (BSA) & FBAR 

FinCEN Statement on Bank Secrecy Act: In general, the IRS and U.S. Government has significantly increased enforcement of international and offshore tax crimes. In order to help summarize the enforcement process and procedures, The Board of Governors of the Federal Reserve System (Federal Reserve), the Federal Deposit Insurance Corporation (FDIC), the Financial Crimes Enforcement Network (FinCEN), the National Credit Union Administration (NCUA), and the Office of the Comptroller of the Currency (OCC) issued a joint statement about enforcement.

When it comes to FBAR, the fact that FinCEN is involved is very important.

We will reproduce the Joint Statement on Bank Secrecy Act & Enforcement:

BSA (Bank Secrecy Act) Enforcement Opening Statement

“This statement describes FinCEN’s approach to enforcing the Bank Secrecy Act (BSA).

The BSA is codified at 12 U.S.C. §§ 1829b, 1951-1959, and 31 U.S.C. §§ 5311-5314, 5316-5332.

Regulations implementing the BSA appear at 31 C.F.R. Chapter X. FinCEN uses the factors described in this statement to determine the appropriate enforcement response when it identifies actual or possible violations of the BSA.

FinCEN is issuing this statement as administrator of the BSA.2 2. 31 C.F.R. § 1010.810(a) (2019) (delegating to FinCEN “overall authority for enforcement and compliance”).”

Background

“Most BSA requirements apply by their terms only to “financial institutions,” as defined in the BSA and its implementing regulations. The definition of financial institution encompasses a wide variety of institutions, including banks, broker-dealers in securities, money services businesses, and casinos and card clubs, among others.

The BSA, in more limited circumstances, prescribes rules of conduct for nonfinancial trades and businesses and individuals. FinCEN may take enforcement actions, to include imposing civil money penalties on financial institutions, nonfinancial trades or businesses, and other persons that violate the BSA, and in a number of instances may take enforcement actions, to include imposing civil money penalties on partners, directors, officers, or employees who participate in these violations.

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. Regulated parties will be afforded an opportunity to respond to and contest factual findings or legal conclusions underlying any FinCEN enforcement action.”

Enforcement Approach

“Enforcement Approach FinCEN has authority to take the following actions when it identifies an actual or possible violation of the BSA or any BSA regulation or order:

No Action

1. No Action. FinCEN may close a matter with no additional action. FinCEN may reopen the matter if FinCEN obtains new material information concerning the matter or becomes aware of additional or subsequent violations.

Warning Letter

2. Warning Letter. FinCEN may issue a warning through a supervisory letter or similar communication.

Equitable Remedies

3. Equitable Remedies. FinCEN may seek an injunction or equitable relief to enforce compliance when FinCEN believes an entity or individual has violated, is violating, or will violate the BSA or any BSA regulation or order.

Settlements

4. Settlements. As part of a settlement, FinCEN may require both remedial undertakings and civil money penalties.

Civil Money Penalties

5. Civil Money Penalties. FinCEN may assess a civil money penalty.

Criminal Referral

6. Criminal Referral. If circumstances warrant, FinCEN may refer a matter to appropriate law enforcement agencies for criminal investigation and/or criminal prosecution.”

In all matters, FinCEN will consider the need to impose compliance commitments deemed necessary and appropriate to ensure that financial institutions are fully complying with their BSA obligations.

FinCEN BSA Enforcement Factors

“FinCEN considers a range of factors when evaluating an appropriate disposition upon identifying actual or possible violations of the BSA. FinCEN considers both compliance with specific BSA requirements—such as registration, recordkeeping, and reporting requirements—as well as the adequacy of an anti-money laundering (AML) program, including the extent of the AML program’s compliance with pillar requirements.

FinCEN strives for proportionality, consistency, and effectiveness. The weight given to any factor in contemplation of the potential dispositions identified above may change based on the relevant facts and circumstances of a case. The factors FinCEN considers include, but are not limited to, the following:

  1. Nature and seriousness of the violations, including the extent of possible harm to the public and the amounts involved.

  2. Impact or harm of the violations on FinCEN’s mission to safeguard the financial system from illicit use, combat money laundering, and promote national security.

  3. Pervasiveness of wrongdoing within an entity, including management’s complicity in, condoning or enabling of, or knowledge of the conduct underlying the violations.

  4. History of similar violations, or misconduct in general, including prior criminal, civil, and regulatory enforcement actions.

  5. Financial gain or other benefit resulting from, or attributable to, the violations.

  6. Presence or absence of prompt, effective action to terminate the violations upon discovery, including self-initiated remedial measures. 7.

  7. Timely and voluntary disclosure of the violations to FinCEN.

  8. Quality and extent of cooperation with FinCEN and other relevant agencies, including as to potential wrongdoing by its directors, officers, employees, agents, and counterparties.

  9. Systemic nature of violations. Considerations include, but are not limited to, the number and extent of violations, failure rates (e.g., the number of violations out of total number of transactions), and duration of violations.

  10. Whether another agency took enforcement action for related activity. FinCEN will consider the amount of any fine, penalty, forfeiture, and/or remedial action ordered.”

Golding & Golding: About our International Tax Law Firm

Golding & Golding specializes exclusively in international tax, and specifically IRS offshore disclosure

We are the “go-to” firm for other Attorneys, CPAs, Enrolled Agents, Accountants, and Financial Professionals across the globe. Our attorneys have worked with thousands of clients on offshore disclosure matters, including FATCA & FBAR.

Each case is led by a Board-Certified Tax Law Specialist with 20-years experience, and the entire matter (tax and legal) is handled by our team, in-house.

*Please beware of copycat tax and law firms misleading the public about their credentials and experience.

Less than 1% of Tax Attorneys Nationwide Are Certified Specialists

Sean M. Golding is one of less than 350 Attorneys (out of more than 200,000 practicing California Attorneys) to earn the Certified Tax Law Specialist credential. The credential is awarded to less than 1% of Attorneys.

Recent Golding & Golding Case Highlights

  • We represented a client in an 8-figure disclosure that spanned 7 countries.
  • We represented a high-net-worth client to facilitate a complex expatriation with offshore disclosure.
  • We represented an overseas family with bringing multiple businesses & personal investments into U.S. tax and offshore compliance.
  • We took over a case from a small firm that unsuccessfully submitted multiple clients to IRS Offshore Disclosure.
  • We successfully completed several recent disclosures for clients with assets ranging from $50,000 – $7,000,000+.

How to Hire Experienced Offshore Counsel?

Generally, experienced attorneys in this field will have the following credentials/experience:

  • 20-years experience as a practicing attorney
  • Extensive litigation, high-stakes audit and trial experience
  • Board Certified Tax Law Specialist credential
  • Master’s of Tax Law (LL.M.)
  • Dually Licensed as an EA (Enrolled Agent) or CPA

Interested in Learning More about Golding & Golding?

No matter where in the world you reside, our international tax team can get you IRS offshore compliant. 

Golding & Golding specializes in FBAR and FATCA. Contact our firm today for assistance with getting compliant.