 | |
| Agency overview | |
|---|---|
| Formed | April 25, 1990 |
| Headquarters | Vienna, Virginia |
| Annual budget | $114.222 million (2018) [1] |
| Agency executive |
|
| Parent agency | Office of Terrorism and Financial Intelligence |
| Website | www |
The Financial Crimes Enforcement Network (FinCEN) is a bureau within the United States Department of the Treasury that collects and analyzes information about financial transactions to combat domestic and international money laundering, terrorist financing, and other financial crimes.
FinCEN's stated mission is "safeguard the financial system from illicit activity, counter money laundering and the financing of terrorism, and promote national security through strategic use of financial authorities and the collection, analysis, and dissemination of financial intelligence." [2] FinCEN serves as the U.S. Financial Intelligence Unit (FIU) and is one of 147 FIUs making up the Egmont Group of Financial Intelligence Units. FinCEN's self-described motto is "follow the money." The website states: "The primary motive of criminals is financial gain, and they leave financial trails as they try to launder the proceeds of crimes or attempt to spend their ill-gotten profits." [3] It is a network bringing people and information together, by coordinating information sharing with law enforcement agencies, regulators and other partners in the financial industry. [3]
FinCEN was established by order of the Secretary of the Treasury (Treasury Order Numbered 105-08) on April 25, 1990. [4] In May 1994, its mission was broadened to involve regulatory responsibilities, and in October 1994 the Treasury Department's precursor of FinCEN, the Office of Financial Enforcement, was merged with FinCEN. [5] On September 26, 2002, after Title III of the PATRIOT Act was passed, Treasury Order 180-01 [6] made it an official bureau in the Department of the Treasury.
Since 1995, FinCEN has employed the FinCEN Artificial Intelligence System (FAIS). [7]
In September 2012, FinCEN's information technology called FinCEN Portal and Query System, migrated with 11 years of data into FinCEN Query, a search engine similar to Google. It is a "one stop shop"[ sic ] accessible via the FinCEN Portal allowing broad searches across more fields than before and returning more results. Since September 2012 FinCEN generates 4 new reports: Suspicious Activity Report (FinCEN SAR), Currency Transaction Report (FinCEN CTR), the Designation of Exempt Person (DOEP) and Registered Money Service Business (RMSB). [8]
As of November 2013, FinCEN employed approximately 340 people, mostly intelligence professionals with expertise in the financial industry, illicit finance, financial intelligence, the AML/CFT (anti-money laundering / combating the financing of terrorism) regulatory regime, computer technology, and enforcement". [9] The majority of the staff are permanent FinCEN personnel, with about 20 long-term detailees assigned from 13 different regulatory and law enforcement agencies. [8] FinCEN shares information with dozens of intelligence agencies, including the Bureau of Alcohol, Tobacco, and Firearms; the Drug Enforcement Administration; the Federal Bureau of Investigation; the U.S. Secret Service; the Internal Revenue Service; the Customs Service; and the U.S. Postal Inspection Service. [10]
 |
The 2001 USA PATRIOT Act required the Secretary of the Treasury to create a secure network for the transmission of information to enforce the relevant regulations. FinCEN's regulations under Section 314(a) enable federal law enforcement agencies, through FinCEN, to reach out to more than 45,000 points of contact at more than 27,000 financial institutions to locate accounts and transactions of persons that may be involved in terrorist financing and/or money laundering. A web interface allows the person(s) designated in §314(a)(3)(A) to register and transmit information to FinCEN. The partnership between the financial community and law enforcement allows disparate bits of information to be identified, centralized, and rapidly evaluated. [15]
As early as 2003 FinCEN disseminated information on "informal value transfer systems" (IVTS), including hawala, a network of people receiving money for the purpose of making the funds payable to a third party in another geographic location,... generally taking place outside of the conventional banking system through non-bank financial institutions or other business entities whose primary business activity may not be the transmission of money. [16] On September 1, 2010, FinCEN issued a guidance on IVTS referencing United States v. Banki and hawala. [17]
In July 2011, FinCEN added "other value that substitutes for currency" to its definition of money services businesses in preparation for adapting the respective rule to virtual currencies. [18] On March 18, 2013, FinCEN issued a guidance regarding virtual currencies, [19] according to which, exchangers and administrators, but not users of convertible virtual currency are considered money transmitters, and must comply with rules to prevent money laundering/terrorist financing ("AML/CFT") and other forms of financial crime, by record-keeping, reporting and registering with FinCEN. Jennifer Shasky Calvery, director of FinCEN said, "Virtual currencies are subject to the same rules as other currencies. … Basic money services business rules apply here." [20]
At a November 2013 Senate hearing, Calvery stated, "It is in the best interest of virtual currency providers to comply with these regulations for a number of reasons. First is the idea of corporate responsibility," contrasting Bitcoin's understanding of a peer to peer system bypassing corporate financial institutions. She stated that FinCEN collaborates with the Federal Financial Institutions Examination Council, a congressionally-chartered forum called the "Bank Secrecy Act (BSA) Advisory Group" and BSA Working Group to review and discuss new regulations and guidance, with the FBI-led "Virtual Currency Emerging Threats Working Group" (VCET) formed in early 2012, the FDIC-led "Cyber Fraud Working Group", the Terrorist Financing & Financial Crimes-led "Treasury Cyber Working Group", and with a community of other financial intelligence units. [9] According to the Department of Justice, VCET members represent the FBI, the Drug Enforcement Administration, multiple U.S. Attorney's Offices, and the Criminal Division's Asset Forfeiture and Money Laundering Section and Computer Crime and Intellectual Property Section. [21]
In 2021, amendments to the Bank Secrecy Act and the federal AML/CTF framework officially incorporated the existing FinCEN guidelines on digital assets. The legislation was updated to encompass "value that substitutes for currency," reinforcing FinCEN's authority over digital assets. As a result, exchanges dealing in these assets were required to register with FinCEN and adhere to specific reporting and recordkeeping obligations for transactions involving certain types of digital assets. [22] For the year 2021, FinCEN received 1,137,451 Suspicious Activity Reports (SARs), which include both traditional financial institutions and cryptocurrency trading entities. Within this category, there were reports of 7,914 suspicious cyber events and 284,989 potential money laundering activities. FinCEN utilizes a dedicated team of analysts to examine these SARs, aiming to detect possible money laundering incidents. [23]
FinCEN is the regulatory agency tasked with overseeing the Beneficial Ownership Information Reporting (BOIR) system in the U.S. This responsibility was established under the Corporate Transparency Act (CTA), which mandates that certain business entities must disclose information about their beneficial owners to FinCEN. CTA aims to enhance transparency and combat financial crimes by preventing the use of anonymous shell companies for illicit purposes. [24] On December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a preliminary injunction against nationwide implementation of the CTA, citing concerns about its constitutionality and impact on small businesses. [25] [26] [27] Treasury filed a notice of appeal on December 5, 2024. [28]
FinCEN administers the BOIR system to collect and maintain accurate records of beneficial ownership information. This information includes details such as the names, addresses, dates of birth, and identification numbers of individuals who ultimately own or control companies. By centralizing this data, FinCEN supports law enforcement efforts to investigate and prosecute financial crimes, ensuring greater accountability and integrity within the corporate sector. [29]
In 2009, the GAO found "opportunities" to improve "interagency and state examination coordination", noting that the federal banking regulators issued an interagency examination manual, that SEC, CFTC, and their respective self-regulatory organizations developed Bank Secrecy Act (BSA) examination modules, and that FinCEN and IRS examining nonbank financial institutions issued an examination manual for money services businesses. Therefore multiple regulators examine compliance of the BSA across industries and for some larger holding companies even within the same institution. Regulators need to promote greater consistency, coordination and information-sharing, reduce unnecessary regulatory burden, and find concerns across industries. [30] FinCEN estimated that it would have data access agreements with 80 percent of state agencies that conduct BSA examinations after 2012. [30]
Since FinCEN's inception in 1990, the Electronic Frontier Foundation in San Francisco has debated its benefits compared to its threat to privacy. [31] FinCEN does not disclose how many Suspicious Activity Reports result in investigations, indictments or convictions, and no studies exist to tally how many reports are filed on innocent people. FinCEN and money laundering laws have been criticized for being expensive and relatively ineffective while violating Fourth Amendment rights, as an investigator may use FinCEN's database to investigate people instead of crimes. [32]
It has also been alleged that FinCEN's regulations against structuring are enforced unfairly and arbitrarily; for example, it was reported in 2012 that small businesses selling at farmers' markets have been targeted, while politically connected people like Eliot Spitzer were not prosecuted. [33] Spitzer's reasons for structuring were described as "innocent". [34]
In February 2019, it was reported that Mary Daly, the oldest daughter of United States Attorney General William Barr, is to leave her position at the United States Deputy Attorney General's office for a FinCEN position. [35] [36] [37]
In September 2020, findings based on a set of 2,657 documents including 2121 suspicious activity reports (SARs) leaked from FinCEN were published as the FinCEN Files. [38] [39] The leaked documents showed that although both FinCEN and the banks that filed SARs knew about billions of dollars in dirty money being moved through the banks, both did very little to prevent the transactions. [38]
The 2016 film The Accountant features a FinCEN investigation into the title character. [40]
In the first episode of the 2017 Netflix show Ozark , FinCEN is mentioned as one of the agencies (along with the DEA, ATF, and FBI) active in monitoring cartel activity in Chicago.
Money laundering is the process of illegally concealing the origin of money obtained from illicit activities such as drug trafficking, underground sex work, terrorism, corruption, embezzlement, and treason, and converting the funds into a seemingly legitimate source, usually through a front organization. As financial crime has become more complex and financial intelligence is more important in combating international crime and terrorism, money laundering has become a prominent political, economic, and legal debate. Money laundering is ipso facto illegal; the acts generating the money almost always are themselves criminal in some way.
The Bank Secrecy Act of 1970 (BSA), also known as the Currency and Foreign Transactions Reporting Act, is a U.S. law requiring financial institutions in the United States to assist U.S. government agencies in detecting and preventing money laundering. Specifically, the act requires financial institutions to keep records of cash purchases of negotiable instruments, file reports if the daily aggregate exceeds $10,000, and report suspicious activity that may signify money laundering, tax evasion, or other criminal activities.
Structuring, also known as smurfing in banking jargon, is the practice of executing financial transactions such as making bank deposits in a specific pattern, calculated to avoid triggering financial institutions to file reports required by law, such as the United States' Bank Secrecy Act (BSA) and Internal Revenue Code section 6050I. Structuring may be done in the context of money laundering, fraud, and other financial crimes. Legal restrictions on structuring are concerned with limiting the size of domestic transactions for individuals.
In financial regulation, a Suspicious Activity Report (SAR) or Suspicious Transaction Report (STR) is a report made by a financial institution about suspicious or potentially suspicious activity as required under laws designed to counter money laundering, financing of terrorism and other financial crimes. The criteria to decide when a report must be made varies from country to country, but generally, it is any financial transaction that either a) does not make sense to the financial institution; b) is unusual for that particular client; or c) appears to be done only for the purpose of hiding or obfuscating another, separate transaction. The report is filed with that country's Financial Intelligence Unit, which is typically a specialist agency designed to collect and analyse transactions and then report these to relevant law enforcement teams.
A currency transaction report (CTR) is a report that U.S. financial institutions are required to file with FinCEN for each deposit, withdrawal, exchange of currency, or other payment or transfer, by, through, or to the financial institution which involves a transaction in currency valued at more than $10,000. Used in this context, currency means the coin and/or paper money of any country that is designated as legal tender by the country of issuance. Currency also includes U.S. silver certificates, U.S. notes, Federal Reserve notes, and official foreign bank notes. Contrary to popular misunderstanding, these reports do not apply to, and are not used for, non-currency transactions such as checks, nor for electronic transfers such as wire and ACH/EFT.
The USA PATRIOT Act was passed by the United States Congress in 2001 as a response to the September 11, 2001 attacks. It has ten titles, each containing numerous sections. Title III: International Money Laundering Abatement and Financial Anti-Terrorism Act of 2001 is actually an act of Congress in its own right as well as being a title of the USA PATRIOT Act, and is intended to facilitate the prevention, detection and prosecution of international money laundering and the financing of terrorism. The title's sections primarily amend portions of the Money Laundering Control Act of 1986 and the Bank Secrecy Act of 1970.
Anti-Money Laundering (AML) refers to a set of policies and practices to ensure that financial institutions and other regulated entities prevent, detect, and report financial crime and especially money laundering activities. Anti-Money Laundering is often paired with the action against terrorism financing, or Combating the Financing of Terrorism, using the acronym AML-CFT. In addition to arrangements intended to ensure that banks and other relevant firms duly report suspicious transactions, the AML policy framework includes financial intelligence units and relevant law enforcement operations.
The USA PATRIOT Act was passed by the United States Congress in 2001 as a response to the September 11 attacks in 2001. It has ten titles, with the third title written to prevent, detect, and prosecute international money laundering and the financing of terrorism.
A Customer Identification Program (CIP) is a United States requirement, where financial institutions need to verify the identity of individuals wishing to conduct financial transactions with them and is a provision of the USA Patriot Act. More commonly known as know your customer, the CIP requirement was implemented by regulations in 2003 which require US financial institutions to develop a CIP proportionate to the size and type of its business. The CIP must be incorporated into the bank's Bank Secrecy Act/Anti-money laundering compliance program, which is subject to approval by the financial institution's board of directors.
Virtual currency, or virtual money, is a digital currency that is largely unregulated, issued and usually controlled by its developers, and used and accepted electronically among the members of a specific virtual community. In 2014, the European Banking Authority defined virtual currency as "a digital representation of value that is neither issued by a central bank or a public authority, nor necessarily attached to a fiat currency but is accepted by natural or legal persons as a means of payment and can be transferred, stored or traded electronically." A digital currency issued by a central bank is referred to as a central bank digital currency.
Financial intelligence (FININT) is the gathering of information about the financial affairs of entities of interest, to understand their nature and capabilities, and predict their intentions. Generally the term applies in the context of law enforcement and related activities. One of the main purposes of financial intelligence is to identify financial transactions that may involve tax evasion, money laundering or some other criminal activity. FININT may also be involved in identifying financing of criminal and terrorist organisations. Financial intelligence can be broken down into two main areas, collection and analysis. Collection is normally done by a government agency, known as a financial intelligence organisation or Financial Intelligence Unit (FIU). The agency will collect raw transactional information and Suspicious activity reports (SAR) usually provided by banks and other entities as part of regulatory requirements. Data may be shared with other countries through intergovernmental networks. Analysis, may consist of scrutinizing a large volume of transactional data using data mining or data-matching techniques to identify persons potentially engaged in a particular activity. SARs can also be scrutinized and linked with other data to try to identify specific activity.
A financial intelligence unit (FIU) is a national body or government agency or international organization which collect information on suspicious or unusual financial activity from the financial industry and other entities or professions required to report suspicious transactions, suspected of being money laundering or terrorism financing.
The chief compliance officer (CCO) is a corporate executive within the C-suite responsible for overseeing and managing regulatory compliance issues within an organization. The CCO typically reports to the chief executive officer or the chief legal officer.
In the legal code of the United States, a money transmitter or money transfer service is a business entity that provides money transfer services or payment instruments. Money transmitters in the US are part of a larger group of entities called money service businesses, or MSBs. Under federal law, 18 USC § 1960, businesses are required to register for a money transmitter license where their activity falls within the state definition of a money transmitter.
A cryptocurrency tumbler or cryptocurrency mixing service is a service that mixes potentially identifiable or "tainted" cryptocurrency funds with others, so as to obscure the trail back to the fund's original source. This is usually done by pooling together source funds from multiple inputs for a large and random period of time, and then spitting them back out to destination addresses. As all the funds are lumped together and then distributed at random times, it is very difficult to trace exact coins. Tumblers have arisen to improve the anonymity of cryptocurrencies, usually bitcoin, since the digital currencies provide a public ledger of all transactions. Due to its goal of anonymity, tumblers have been used to money launder cryptocurrency.
United States virtual currency law is financial regulation as applied to transactions in virtual currency in the U.S. The Commodity Futures Trading Commission has regulated and may continue to regulate virtual currencies as commodities. The Securities and Exchange Commission also requires registration of any virtual currency traded in the U.S. if it is classified as a security and of any trading platform that meets its definition of an exchange.
Jennifer Shasky Calvery is an American attorney. She is the global head of financial crime threat mitigation for HSBC. She served as director of the U.S. Treasury Department's Financial Crimes Enforcement Network (FinCEN) from September 2012 to May 2016.
James H. Freis Jr. is an American lawyer and financial industry executive who from 2007 to 2012 served as the United States Department of the Treasury's 6th Director of the Financial Crimes Enforcement Network (FinCEN), where he expanded the scope of the anti-money laundering regulations and became known for spearheading efforts to combat fraud and implementing modern data analysis. He was an attorney and central banker at the Federal Reserve Bank of New York and the Bank for International Settlements.
The FinCEN Files are documents from the U.S. Treasury's Financial Crimes Enforcement Network (FinCEN), that have been leaked to BuzzFeed News and then shared with the International Consortium of Investigative Journalists (ICIJ), and published globally on 20 September 2020. The 2,657 leaked documents include 2,121 suspicious activity reports (SARs) covering over 200,000 suspicious financial transactions between 1999 and 2017 valued at over US$2 trillion by multiple global financial institutions.
The Anti-Money Laundering Improvement Act (AML) is a collection of regulations and laws in the United States aimed at combating money laundering and terrorist financing. The act builds upon the Bank Secrecy Act (BSA), the first anti-money laundering enforcement law.
31 C.F.R. § 1010.100(ff)(5)(i)(A)
| Deputy Secretary of the Treasury |  | |
|---|---|---|
| Under Secretary of the Treasury for International Affairs |
| |
| Under Secretary of the Treasury for Domestic Finance |
| |
| Under Secretary of the Treasury for Terrorism and Financial Intelligence | ||
| Treasurer of the United States | ||
| International | |
|---|---|
| National | |
