FDIC Federal Register Citations

[Federal Register: March 26, 1997 (Volume 62, Number 58)]

[Notices]

[Page 14532-14534]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

[DOCID:fr26mr97_dat-165]

=======================================================================

-----------------------------------------------------------------------

DEPARTMENT OF THE TREASURY

Financial Crimes Enforcement Network

Privacy Act of 1974; System of Records

AGENCY:Departmental Offices, Treasury.

ACTION: Notice of a proposed New Privacy Act system of records.

-----------------------------------------------------------------------

SUMMARY: In accordance with the Privacy Act of 1974, as amended, 5

U.S.C. 552a, the Financial Crimes Enforcement Network (``FinCEN''),

Department of the Treasury (Treasury), gives notice of a proposed new

Treasury--wide system of records entitled the ``Suspicious Activity

Reporting System (the ``SAR System'')--Treasury/DO.212.''

DATES: Comments must be received no later than April 25, 1997. The

proposed system of records will become effective without further notice

April 25, 1997, unless comments are received that result in a contrary

determination and notice is published to that effect.

ADDRESSES: Written comments should be sent to Office of Legal Counsel,

FinCEN, 2070 Chain Bridge Road, Suite 200, Vienna, VA 22182-2536,

Attention: SAR System of Records. Comments will be made available for

inspection and copying by appointment. Persons wishing such an

opportunity should call Eileen Dolan, (703) 905-3590.

FOR FURTHER INFORMATION CONTACT: Cynthia A. Langwiser, Attorney-

Advisor, Office of Legal Counsel, FinCEN, (703) 905-3582.

SUPPLEMENTARY INFORMATION:

This new Privacy Act system of records is proposed to be

established for the retention, retrieval, and dissemination of

information, reported by financial institutions or certain of their

affiliates to the Federal Government, concerning suspicious

transactions and known or suspected criminal violations occurring by,

at, or through such institutions. Suspicious transaction reporting is

required by rules issued by FinCEN and the five supervisory agencies

that examine and regulate the safety and soundness of financial

institutions, namely the Board of Governors of the Federal Reserve

System (the ``Board''), the Office of the Comptroller of the Currency

(``OCC''), the Federal Deposit Insurance Corporation (``FDIC''), the

Office of Thrift Supervision (``OTS''), and the National Credit Union

Administration (``NCUA'') (collectively, the ``Federal Supervisory

Agencies'').\1\

---------------------------------------------------------------------------

\1\ FinCEN and the Federal Supervisory Agencies have all

published rules requiring such reporting. See the rules publshed by

FinCEN, the Board, OCC, FDIC, OTS and NCUA, respectively, at: 61 FR

4326 (February 5, 1996); 61 FR 4338 (February 5, 1996); 61 FR 4332

(February 5, 1996); 61 FR 6095 (February 16, 1996); 61 FR 6100

February 16, 1996); 61 FR 11526 (March 21, 1996).

---------------------------------------------------------------------------

The requirements of FinCEN and the Federal Supervisory Agencies

create an integrated system for reporting suspicious activity and known

or suspected crimes. Under these requirements, financial institutions

file a single uniform Suspicious Activity Report (a ``SAR'') with

FinCEN. Previously, a financial institution reporting a known or

suspected violation of law was required to file multiple copies of

criminal referral forms with its Federal financial regulatory agency

and Federal law enforcement agencies. Each Federal financial regulatory

agency had promulgated a different form. Under the new system, a

financial institution meets its obligation to report a known or

suspected violation of law by filing one copy of a SAR with FinCEN.

SAR records are maintained in an automated database that is

operated by agreement among FinCEN and the Federal Supervisory

Agencies. FinCEN manages the automated SAR System, which is housed at

the Internal Revenue Service Computing Center in Detroit, Michigan. The

SAR System contains the suspicious activity information filed by

financial institutions and related information concerning criminal

prosecutions, civil actions, enforcement proceedings and investigations

of concern to FinCEN and the Federal Supervisory Agencies. Currently,

these categories of records are included in an existing Privacy Act

system of records, FinCEN Data Base, Treasury/DO .200.\2\ However, in

order to provide more current and detailed information about these

categories of records, a new and separate Privacy Act system of records

is being created.

---------------------------------------------------------------------------

\2\In addition, the Federal Supervisory Agencies have modified

their existing Privacy Act Systems of Records to reflect the new

interagency suspicious activity reporting process and the use of the

database maintained and managed by FinCEN pursuant to the agreement.

See the notices published by the Board, OCC, FDIC, OTS, and NCUA,

respectively, at 60 FR 44347 (August 25, 1995); 60 FR 64239

(December 14, 1995); 60 FR 52001 (October 4, 1995); 60 FR 64241

(December 14, 1995) and 61 FR 8689 (March 5, 1996).

---------------------------------------------------------------------------

This single information system for the use of such reports is a key

part of the integrated system. The SAR System will permit enhanced

analysis and tracking of the information contained in the reports, and

rapid dissemination to appropriate Federal and state law enforcement

and supervisory agencies. As a central repository for investigatory or

enforcement information, the SAR System will permit analysis,

retrieval, and dissemination of information by the Federal Supervisory

Agencies, by appropriate Federal, state, and local law enforcement

agencies, state banking supervisory agencies, and by FinCEN itself (SAR

Users).\3\ In addition, the SAR System will permit dissemination of

information, where appropriate, to non--United States financial

regulatory agencies and law enforcement authorities. The SAR System

will thereby improve efforts to prevent, identify, and enforce the laws

against financial wrongdoing.

---------------------------------------------------------------------------

\3\In accordance with 31 U.S.C. 5318(g), data from the SAR

System is exchanged, retrieved, and disseminated, both manually and

electronically among FinCEN, the Federal Supervisory Agencies,

appropriate Federal, state, and local law enforcement agencies, and

state banking supervisory agencies. Section 5318(g)(4)(B)

specifically require that the agency designated as the repository

for suspicious transaction reports refer those reports to any

appropriate law enforcement or supervisory agency.

---------------------------------------------------------------------------

Because records in this database are generated under 31 U.S.C.

5318(g)(4), which authorizes the Secretary of the Treasury to designate

a single agency to whom suspicious activity reports shall be made,

access to and use of these records will be governed by the routine uses

set forth in this notice. Accordingly, the routine uses reflect sharing

among Federal Supervisory Agencies and law enforcement authorities.

Additionally, the safeguards provide that on--line access to the

computerized database is limited to authorized individuals who have

been issued a password and nontransferable identifier.

Because information in the SAR System may be retrieved by personal

identifier, the Privacy Act of 1974 requires the Treasury Department to

give general notice and seek public comments about creation of this new

separate system of records. A new system of records report, as required

by 5 U.S.C. 552a(r), has been submitted to the Committee on Government

Reform and Oversight of the House of Representatives, the Committee on

Governmental Affairs of the Senate, and the Office of Management and

Budget (``OMB''). See Appendix I to OMB Circular A-130, ``Federal

Agency Responsibilities for Maintaining Records About Individuals,'' 61

FR 6428, 6435 (February 20, 1996). The proposed system of records,

Suspicious Activity Reporting System--Treasury/

[[Page 14533]]

DO 212, is published in its entirety below.

Dated: February 3, 1997.

Alex Rodriguez,

Deputy Assistant Secretary (Administration).

TREASURY/DO .212

System Name:

Suspicious Activity Reporting System (the ``SAR System'').

System Location:

The SAR System is housed at the Internal Revenue Service Computing

Center (``DCC'') in Detroit, Michigan and is managed by the Financial

Crimes Enforcement Network (``FinCEN''), 2070 Chain Bridge Road, Suite

200, Vienna, VA 22182, with the assistance of the staff of DCC.

Categories of Individuals Covered by the System:

The SAR System contains information about--(1) Individuals or

entities that are known perpetrators or suspected perpetrators of a

known or suspected Federal criminal violation, or pattern of criminal

violations, committed or attempted against a financial institution, or

participants in a transaction or transactions conducted through the

financial institution, that has been reported by the financial

institution, either voluntarily or because such a report is required

under the rules of FinCEN, one or more of the Federal Supervisory

Agencies (the Board of Governors of the Federal Reserve System (``the

Board''), the Office of the Comptroller of the Currency (``OCC''), the

Federal Deposit Insurance Corporation (``FDIC''), the Office of Thrift

Supervision (``OTS''), and the National Credit Union Administration

(``NCUA'') (collectively, the ``Federal Supervisory Agencies'')), or

both.

(2) Individuals or entities that are participants in transactions,

conducted or attempted by, at or through a financial institution, that

have been reported because the institution knows, suspects, or has

reason to suspect that: (a) the transaction involves funds derived from

illegal activities, the transaction is intended or conducted to hide or

disguise funds or assets derived from illegal activities as part of a

plan to violate or evade any law or regulation or to avoid any

transaction reporting requirement under Federal law;(b) the transaction

is designed to evade any regulations promulgated under the Bank Secrecy

Act, Pub. L. 91-508, as amended, codified at 12 U.S.C. 1829b, 12 U.S.C.

1951-1959, and 31 U.S.C. 5311-5330; or (c) the transaction has no

business or apparent lawful purpose or is not the sort in which the

particular customer would normally be expected to engage, and the

financial institution knows of no reasonable explanation for the

transaction after examining the available facts, including the

background and possible purpose of the transaction;

(3) Individuals who are directors, officers, employees, agents, or

otherwise affiliated with a financial institution;

(4) Individuals or entities that are actual or potential victims of

a criminal violation or series of violations;

(5) Individuals who are named as possible witnesses in connection

with matters arising from any such report;

(6) Individuals or entities named as preparers of any such report;

(7) Individuals or entities named as persons to be contacted for

assistance by government agencies in connection with any such report;

(8) Individuals or entities who have or might have information

about individuals or criminal violations described above; and

(9) Individuals or entities involved in evaluating or investigating

any matters arising from any such report.

Categories of Records in the System:

The SAR System contains information reported to FinCEN by

financial institutions on a Suspicious Activity Report (``SAR'')

required under the authority of FinCEN or one or more of the Federal

Supervisory Agencies, or both. SARs contain information about the

categories of persons or entities specified in ``Categories of

Individuals Covered by the System.'' The SAR System may also contain

records pertaining to criminal prosecutions, civil actions, enforcement

proceedings, and investigations resulting from or relating to SARs.

Additionally, it will contain records pertaining to criminal

prosecutions, civil actions, enforcement proceedings, and

investigations relating to institutions required to file reports or

under the supervision of one or more of the Federal Supervisory

agencies.

Authority for Maintenance of the System:

The system is established and maintained in accordance with 31

U.S.C. 5318(g); 31 CFR part 103; 31 U.S.C. 321; and Department of the

Treasury Order 105-08.

Purpose(s):

The requirements of FinCEN and the Federal Supervisory Agencies

create an integrated process for reporting suspicious activity and

known or suspected crimes by, at, or through depository institutions

and certain of their affiliates. The process is based on a single

uniform SAR filed with FinCEN.

The SAR System has been created, as a key part of this integrated

reporting process, to permit coordinated and enhanced analysis and

tracking of such information, and rapid dissemination of SAR

information to appropriate law enforcement and supervisory agencies.

The provisions of 31 U.S.C. 5318(g)(4)(B) specifically require that the

agency designated as repository for SARs refer those reports to any

appropriate law enforcement or supervisory agency.

Data from the SAR System will be exchanged, retrieved, and

disseminated, both manually and electronically among FinCEN, the

Federal Supervisory Agencies, appropriate Federal, state, and local law

enforcement agencies, and state banking supervisory agencies. Agencies

to which information will be referred electronically, which in certain

cases may involve electronic transfers of batch information, include

the Federal Supervisory Agencies, the Federal Bureau of Investigation

(FBI), the Criminal Investigation Division of the Internal Revenue

Service, the United States Secret Service, the United States Customs

Service, the Executive Office of the United States Attorneys and the

Offices of the 93 United States Attorneys, and state bank supervisory

agencies and certain state law enforcement agencies, which have entered

into appropriate agreements with FinCEN. (The FBI and Secret Service

may receive electronic transfers of batch information as forms are

filed to permit those agencies more efficiently to carry out their

investigative responsibilities.) Organizations to which information is

regularly disseminated are referred to as SAR System Users. It is

anticipated that information from the SAR system will also be

disseminated to other appropriate Federal, state, or local law

enforcement organizations and regulatory agencies that enter into

appropriate agreements with FinCEN. In addition, information may be

disseminated to non-United States financial regulatory and law

enforcement agencies.

Routine Uses of Records Maintained in the System, Including Categories

of Users and the Purposes of Such Uses:

These records and information in these records may be used to:

(1) Provide information or records, electronically or manually, to

SAR System Users relevant to the enforcement and supervisory programs

and operations of those Users;

(2) Provide SAR System Users and their Executive Departments with

[[Page 14534]]

reports that indicate the number, amount, individual identity, and

other details concerning potential violations of the law that have been

the subject of Suspicious Activity Reports;

(3) Provide information or records to any appropriate domestic or

non-United States governmental agency or self-regulatory organization

charged with the responsibility of administering law or investigating

or prosecuting violations of law, or charged with the responsibility of

enforcing or implementing a statute, rule, regulation, order, or

policy, or charged with the responsibility of issuing a license,

security clearance, contract, grant, or benefit, when relevant to the

responsibilities of these agencies or organizations.

(4) Provide information or records, when appropriate, to

international and foreign governmental authorities in accordance with

law and formal or informal international agreement;

(5) Disclose on behalf of a SAR System User, the existence, but not

necessarily the content, of information or records to a third party, in

cases where a SAR System User is a party or has a direct interest and

where the SAR System User has concluded that such disclosure is

necessary;

(6) Provide information or records to the Department of Justice, or

in a proceeding before a court, adjudicative body, or other

administrative body before which the SAR System User is authorized to

appear, when (a) the SAR System User, or any component thereof; or (b)

any employee of the SAR System User in his or her official capacity; or

(c) any employee of the SAR System User, where the Department of

Justice or the SAR System User has agreed to represent the employee; or

(d) the United States is a party to litigation or has an interest in

such litigation, when the SAR System User determines that litigation is

likely to affect the SAR System User or any of its components and the

use of such records by the Department of Justice or the SAR System User

is deemed by the SAR System User to be relevant and necessary to the

litigation, provided, however, that in each case it has been determined

that the disclosure is compatible with the purpose for which the

records were collected;

(7) Disclose information or records to individuals or entities to

the extent necessary to elicit information pertinent to the

investigation, prosecution, or enforcement of civil or criminal

statutes, rules, regulations, or orders;

(8) In accordance with Executive Order 12968 (August 2, 1995),

provide information or records to any appropriate government authority

in connection with investigations and reinvestigations to determine

eligibility for access to classified information to the extent relevant

for matters that are by statute permissible subjects of inquiry.

(9) Provide, when appropriate, information or records to a bar

association, or other trade or professional organization performing

similar functions, for possible disciplinary action;

(10) Provide information or records to the Department of State and

to the United States Intelligence Community, within the meaning of

Executive Order 12333 (December 4, 1981) to further those agencies'

efforts with respect to national security and international narcotics

trafficking;

(11) Furnish analytic and statistical reports to government

agencies and the public providing information about trends and patterns

derived from information contained on Suspicious Activity Reports, in a

form in which individual identities are not revealed; and

(12) Disclose information or records to any person with whom

FinCEN, the DCC or a SAR System User contracts to provide consulting,

data processing, clerical, or secretarial functions relating to the

official programs and operations of FinCEN, DCC, or the SAR System

User.

Policies and Practices for Storing, Retrieving, Accessing, Retaining,

and Disposing of Records in the System:

Storage:

Records are maintained in magnetic media and on hard paper copy.

Retrievability:

Data in the SAR System may be retrieved by sectionalized data

fields (i.e., name of financial institution or holding company, type of

suspected violation, individual suspect name, witness name, and name of

individual authorized to discuss the referral with government

officials) or by the use of search and selection criteria.

Safeguards:

The system is located in a guarded building that has restricted

access. Access to the computer facilities and any paper records is

subject to additional physical safeguards that restrict access. Access

to any electronic records in the system is restricted by means of

passwords and non-transferable identifiers issued to authorized SAR

System Users. The system complies with all applicable security

requirements of the Department of the Treasury.

Retention and Disposal:

Records in this system will be updated periodically to reflect

changes, and will be maintained in electronic form as long as needed

for the purpose for which the information was collected. Records will

then be disposed of in accordance with applicable law.

System Manager and Address:

Deputy Director, Financial Crimes Enforcement Network, United

States Department of the Treasury, 2070 Chain Bridge Road, Suite 200,

Vienna, Virginia 22182.

Notification Procedure:

This system is exempt from notification requirements, record

access requirements, and requirements that an individual be permitted

to contest its contents, pursuant to the provisions of 5 U.S.C.

Sec. 552a(j)(2) and (k)(2).

Record Access Procedures:

See ``Notification Procedure'' above.

Contesting Record Procedures:

See ``Notification Procedure'' above.

Record Source Categories:

Records in this system may be provided by or obtained from:

individuals; financial institutions and certain of their affiliates;

Federal Supervisory Agencies; State financial institution supervisory

agencies; domestic or foreign governmental agencies; foreign or

international organizations; and commercial sources. Pursuant to the

provisions of 5 U.S.C. 552a(j)(2) and (k)(2), this system is exempt

from the requirement that the record source categories be disclosed.

Exemptions Claimed for the System:

This system is exempt from 5 U.S.C. 552a(c)(3), (c)(4), (d)(1),

(d)(2), (d)(3), (d)(4), (e)(1), (e)(2), (e)(3), (e)(4)(G), (e)(4)(H),

(e)(4)(I), (e)(5), (e)(8), (f) and (g) of the Privacy Act pursuant to 5

U.S.C. 552a(j)(2) and (k)(2).

[FR Doc. 97-7559 Filed 3-25-97; 8:45 am]

BILLING CODE: 4820-03-F