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Law360 (December 10, 2020, 6:10 PM EST ) The head of the Financial Crimes Enforcement Network on Thursday applauded companies for reporting suspicious activity during the COVID-19 pandemic, but he said their reports need to be more specific.
FinCEN director Kenneth Blanco also pointed to new guidance issued Thursday clarifying how firms can "fully utilize" an information-sharing program set up as part of the Patriot Act.
Blanco, speaking at a virtual conference put on by the American Bankers Association, thanked companies across various industries for submitting about 150,000 suspicious activity reports, or SARs. But he also drilled home the point that "more specificity" is important to properly direct the alerts to the appropriate divisions of the agency.
"I want to thank all of you and encourage you to keep up the great work and the reporting that you're making," Blanco said. "It's making a difference in the lives of many millions of people ... helping our nation, our national security, our families and our communities."
However, Blanco reiterated several times that it's essential that companies filing SARs make them as specific as possible so they can reach the appropriate divisions, and cautioned against "vague" references to the virus.
"The more specific you are in describing the suspicious activity you see in the SAR that you submit to FinCEN, the more useful it will be to law enforcement and their partners, and the easier and faster it will get your SAR to the right investigative team," he said.
"Let me just say that again: The more specific you are in what you're seeing and your SAR reporting is going to get to the right place faster," Blanco said.
"Different law enforcement teams are investigating fraud in different government programs, and vague references to 'stimulus' or 'CARES Act' or 'benefit' in SARS hinder our ability to get the information into the right hands in the right place," he added.
The Patriot Act allows banks to share information about specified unlawful activities, or SUAs, with each other and the federal government. Thursday's guidance gives banks more leeway to share information even if they aren't sure unlawful behavior accurred, Blanco said.
"Our guidance clarifies that financial institutions do not need to have specific information that these activities directly relate to proceeds of an SUA, or to have identified specific proceeds of an SUA as being laundered," Blanco said. "Financial institutions do not need to have made a conclusive determination that the activity is suspicious."
Blanco said FinCEN had received more than 147,000 SARs between the start of February through Nov. 30.
Blanco highlighted key industries that submitted the greatest share of that total, including almost 102,000 from depository institutions; 21,000 from credit unions; 9,000 from money services businesses; 2,000 from the securities and futures industry; and 750 from casinos and so-called card clubs.
Blanco gave examples of the level of specificity he wants.
For instance, if the suspicious activity is related to an automated clearing house payment from a state unemployment insurance program, "COVID-19 unemployment insurance fraud" should be specified in Field 2 of the SAR "as well as in the narrative," he said.
"This will make it easier for your SAR to get to the law enforcement teams working with the states on unemployment fraud," Blanco said.
He noted that its operations continued unabated despite the challenges caused by COVID-19, calling attention to guidance issued since the start of the pandemic warning of potential fraud.
That included a March 16 statement warning of scams "similar to those that occur in the wake of natural disasters," including individuals impersonating the U.S. government or government officials; May 18 guidance regarding potential medical scams; and a July 30 memo about cybercrime exploiting the pandemic.
"We cannot stop in the face of crisis or challenges," Blanco said. "As the pandemic began to unfold, we all had to pivot — everyone did, including FinCEN — and pivot quickly. As many of you know, FinCEN has an incredibly important mission, one that profoundly impacts people's lives. Our mission continues."
The comments follow Tuesday's remarks from FBI Director Christopher Wray urging banks to continue reaching out to the agency as COVID-19-related financial crimes ramp up.
--Editing by Adam LoBelia.
For a reprint of this article, please contact reprints@law360.com.
