81 FR 86577 - Supplemental Information Regarding the Final Rule Imposing the Fifth Special Measure Against FBME Bank, Ltd.

DEPARTMENT OF THE TREASURY
Financial Crimes Enforcement Network

Federal Register Volume 81, Issue 231 (December 1, 2016)

Page Range		86577-86579
FR Document		2016-28752

In its September 20, 2016 order, the U.S. District Court for the District of Columbia remanded to FinCEN the final rule imposing a prohibition on covered financial institutions from opening or maintaining correspondent accounts for, or on behalf of, FBME Bank, Ltd. In its memorandum opinion accompanying that order, the Court stated that the agency had not responded meaningfully to FBME's comments regarding the agency's treatment of aggregate Suspicious Activity Report (SAR) data. The Court found that those comments challenged FinCEN's interpretation of SAR data on at least four distinct grounds. In this supplement to the final rule, FinCEN provides further explanation addressing FBME's comments.

Federal Register, Volume 81 Issue 231 (Thursday, December 1, 2016)

[Federal Register Volume 81, Number 231 (Thursday, December 1, 2016)]
[Rules and Regulations]
[Pages 86577-86579]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-28752]


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DEPARTMENT OF THE TREASURY

Financial Crimes Enforcement Network

31 CFR Part 1010

RIN 1506-AB27


Supplemental Information Regarding the Final Rule Imposing the 
Fifth Special Measure Against FBME Bank, Ltd.

AGENCY: Financial Crimes Enforcement Network (``FinCEN'').

ACTION: Supplement to final rule.

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SUMMARY: In its September 20, 2016 order, the U.S. District Court for 
the District of Columbia remanded to FinCEN the final rule imposing a 
prohibition on covered financial institutions from opening or 
maintaining correspondent accounts for, or on behalf of, FBME Bank, 
Ltd. In its memorandum opinion accompanying that order, the Court 
stated that the agency had not responded meaningfully to FBME's 
comments regarding the agency's treatment of aggregate Suspicious 
Activity Report (SAR) data. The Court found that those comments 
challenged FinCEN's interpretation of SAR data on at least four 
distinct grounds. In this supplement to the final rule, FinCEN provides 
further explanation addressing FBME's comments.

DATES: December 1, 2016.

FOR FURTHER INFORMATION CONTACT: The FinCEN Resource Center at (800) 
767-2825 or [email protected].

SUPPLEMENTARY INFORMATION: 

I. Background

    In its September 20, 2016 order, the U.S. District Court for the 
District of Columbia remanded to FinCEN the final rule imposing a 
prohibition on covered financial institutions from opening or 
maintaining correspondent accounts for, or on behalf of, FBME Bank, 
Ltd. (FBME). In its memorandum opinion accompanying that order, the 
Court stated that the agency had not responded meaningfully to FBME's 
comments regarding the agency's treatment of aggregate SAR data. In 
this supplement to the final rule, FinCEN notes that FBME's comments 
regarding FinCEN's use of SARs in the rulemaking process reflect a 
misunderstanding of SARs generally and how FinCEN analyzed and used 
SARs in this rulemaking.
    As an initial matter, FBME overstates the centrality of the use of 
SARs in FinCEN's determination that FBME is of primary money laundering 
concern. As reflected in the agency's Notice of Finding (NOF), Final 
Rule, and Administrative Record, far from being the only evidence that 
informed FinCEN's determination that FBME is of primary money 
laundering concern, the agency's analysis of SARs simply affirmed 
FinCEN's concern surrounding FBME's involvement in money laundering 
that was informed by other information in the Administrative Record. 
For instance, as detailed in the NOF, this information included: (1) An 
FBME customer's receipt of a deposit of hundreds of thousands of 
dollars from a financier for Lebanese Hezbollah; (2) providing 
financial services to a financial advisor for a major transnational 
organized crime figure; (3) FBME's facilitation of funds transfers to 
an FBME account involved in fraud against a U.S. person, with the FBME 
customer operating the alleged fraud scheme later being indicted in the 
United States District Court for the Northern District of Ohio; and (4) 
FBME's facilitation of U.S. sanctions evasion through its extensive 
customer base of shell companies, including at least one FBME customer 
that was a front company for a U.S.-sanctioned Syrian entity, the 
Scientific Studies and Research Center, which used its FBME account to 
process transactions through the U.S. financial system.
    Set forth below are summaries of FBME's four arguments in its 
comments surrounding FinCEN's interpretation of SARs and the agency's 
responses.
    1. FBME argues that SARs are so over-inclusive--``sweeping in [so 
many] transactions that are perfectly legitimate''--that 
``categorically'' viewing SARs as indicative of illicit transactions is 
``invalid and improper.''
    In its January 26, 2016 comments, FBME asserted that:

    To paint FBME as posing a significant threat to U.S. and other 
financial institutions, FinCEN relies on limited and misleading 
statistical data regarding ``suspicious wire transfers'' as well as 
biased reports from financial institutions seeking to offload 
responsibility for their own actions. During the hearing before 
Judge Cooper, FinCEN revealed that the statistical data relied upon 
in the NOF was based on SARs. But such reliance is categorically 
invalid and improper. To begin, we know of no instance, prior to 
this proceeding, in which FinCEN has equated any particular SARs 
data or rate as indicative of a problem under Section 311 [of the 
USA PATRIOT Act]. Nor is such use valid. To the contrary, it ignores 
the purpose of a SAR, which involves a designedly low threshold for 
the sake of erring on the side of over-inclusion--sweeping in 
transactions that are perfectly legitimate, simply to ensure there 
is scrutiny of them to ensure against any issue. It is spurious in 
this light to take a SAR or any number of them as evidencing the 
illegitimacy of any transaction or set thereof--not to mention as 
evidence that a particular bank is one of ``primary money laundering 
concern'' under Section 311.\1\
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    \1\ FBME's January 26, 2016 Comments, pp. 50-51.

    Contrary to FBME's assumptions, FinCEN analyzed the SARs as 
qualitative evidence of activity conducted by FBME that reflected one 
of FinCEN's primary concerns about FBME--specifically, a 
``[s]ignificant [v]olume'' of ``[o]bscured [t]ransactions'' as 
indicated in part by the size and number of ``[w]ire transfers related 
to suspected shell company activities.'' NOF, 79 FR at 42640. While 
FinCEN recognizes that actual wrongdoing does not necessarily underlie 
the suspicious activity described in any particular SAR, many of the 
SARs relating to FBME described typical indicators of shell company 
activity. As FinCEN has explained, it is particularly concerned, among 
other things, by the lack of

[[Page 86578]]

transparency associated with transactions by FBME's shell company 
customers, and the high volume of U.S. dollar transactions conducted by 
these shell companies with no apparent business purpose. March 31, 2016 
Final Rule, 81 FR at 18487. Therefore, when reviewing SARs associated 
with such activity, FinCEN appropriately concluded that they were 
indicative of potential money laundering. In addition to the SARs as 
well as other information available to FinCEN discussed in the NOF and 
Final Rule, the agency's concerns were supported by FBME's own 
acknowledgement in its January 26, 2016 comment that it transacted with 
shell companies.
    Moreover, with respect to FBME's claim that SARs are over-
inclusive, based on FinCEN's extensive experience with SAR filings and 
the other illicit conduct at FBME detailed in the NOF, Final Rule, and 
Administrative Record, FinCEN assesses it more likely that the SARs 
understate the size and frequency of shell company and other suspicious 
activity conducted by FBME. The SARs include only the information that 
financial institutions identified and reported to FinCEN; they do not 
necessarily reflect all suspicious transactions engaged in by FBME. 
FinCEN assesses that such is the case here given FinCEN's determination 
that FBME has sought to evade anti-money laundering (AML) regulations, 
has ignored the Central Bank of Cyprus' AML directives, and that 
following the issuance of the NOF, FBME employees took various measures 
to obscure information, all of which may have undermined the ability of 
U.S. financial institutions to detect and report all of FBME's 
suspicious activity.
    2. FBME argues that while the absolute dollar amounts of 
transactions tagged as ``suspicious'' might appear high on the surface, 
they represented a small proportion of FBME's overall transactions.
    FBME notes that while the NOF highlighted ``at least 4,500 
suspicious wire transfers through U.S. correspondent accounts that 
totaled at least $875 million between November 2006 and March 2013,'' 
that figure represented, according to FBME, ``only 0.55% of the total 
amount of transfers and 0.81% of the [U.S. dollar] amount of transfers 
conducted by FBME during this period.'' \2\ In other words, FBME 
asserts without supporting evidence that the SARs reflect a small 
portion of the bank's total transactions. But the final rule never 
suggested otherwise; FinCEN may identify a bank as a financial 
institution of primary money laundering concern pursuant to Section 311 
even if it has extensive legitimate activities.
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    \2\ FBME's January 26, 2016 Comments, p. 52.
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    FinCEN considered the volume of suspicious transactions in absolute 
terms--not whether such money laundering was a greater percentage of 
FBME's activities than that suggested in FBME's comments. FBME's 
comment incorrectly assumes that FinCEN's focus in the NOF was, or 
should have been, based upon a percentage of suspicious activity by 
FBME's customers. To the contrary, FinCEN made clear it was concerned 
by the substantial volume of all suspicious activity at the bank, 
including the suspicious activity reported in SARs and that described 
in other sources available to the agency and included in the 
Administrative Record. The overall amount of such activity informed 
FinCEN's evaluation of the ``extent to which'' FBME has been ``used to 
facilitate or promote money laundering'' \3\ and its conclusion that 
``FBME facilitated a substantial volume of money laundering through the 
bank for many years.'' \4\ FinCEN finds the opportunity for money 
laundering of such a magnitude and through so many transactions to be 
``substantial'' because, in absolute terms, it poses a significant 
threat to the U.S. and international financial systems, potentially 
allowing large amounts of funding to pass to terrorist or criminal 
activity. FinCEN does not find that the size of a bank that facilitates 
a substantial amount of money laundering is determinative of the threat 
posed by that activity. Adopting such an assumption would essentially 
permit significant volumes of money to pass through large banks. In any 
event, for the reasons described in the preceding section, FinCEN 
assesses that it is more likely that, if anything, the SARs understate 
the size and frequency of suspicious activity conducted by FBME.
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    \3\ 31 U.S.C. 5318A(c)(2)(B)(i).
    \4\ 79 FR 42639 (July 22, 2014).
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    3. FBME criticizes FinCEN for ``fail[ing] to consider alternative 
bases for the increase in SARs involving FBME * * * between April 2013 
and April 2014,'' particularly the ``Cypriot financial crisis and 
attendant controls.''
    FinCEN recognizes that suspicious activity and reports of such 
activity could be influenced by a number of factors, including 
financial developments within a country or internationally, but FinCEN 
views this scenario as inapplicable in this case. SARs typically deal 
with suspicious activity by individuals and entities conducting 
transactions, not systemic issues involving debt defaults and liquidity 
challenges by financial institutions. FinCEN did not rely on any 
suggestion that the number of SAR filings involving FBME increased 
during the Cypriot financial crisis as compared to past periods in the 
analysis. In addition, FinCEN finds no reason to assume that any 
renewed focus on Cypriot financial controls would decrease rather than 
increase the credibility of SAR filings as to FBME, let alone decrease 
the credibility of those filings to such an extent as to undermine its 
finding of a substantial volume of shell company activity at FBME. 
Finally, the NOF highlighted suspected shell company activities 
accounting for hundreds of millions of dollars between 2006-2014; \5\ 
such activity was not limited to the period of the Cypriot financial 
crisis.
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    \5\ 79 FR 42639 at 42640 (July 22, 2014).
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    4. FBME faults FinCEN for failing to provide either a ``point of 
comparison between FBME and other * * * banks that [the agency] 
considers similarly situated but less deserving of suspicion given 
their SAR statistics,'' or ``any baseline for the SARs statistics it 
considers standard or acceptable for an international bank like FBME.''
    Again, FBME misunderstands the role that SARs played in FinCEN's 
analysis, incorrectly assuming that the analysis necessarily depended 
on a relative comparison to other banks. FBME appears to assume that 
SAR filings, or the absolute number and size of suspicious transactions 
described in such filings, are not in themselves relevant, but instead 
that only relative SAR rates among banks can be an indication of 
significant suspicious activity. FinCEN finds this assumption 
unwarranted. FinCEN found that the SAR filings discussed in the NOF 
informative of significant shell company activity at FBME to be 
``substantial'' because, in absolute terms, it poses a significant 
threat to the U.S. and international financial system, potentially 
allowing large amounts of funding to pass to terrorist or criminal 
activity. This conclusion did not depend on comparison with other 
banks.
    In addition, as noted in the NOF and Final Rule, FinCEN concluded 
that FBME has sought to evade AML regulations, has ignored the Central 
Bank of Cyprus' AML directives, and that following the issuance of the 
NOF, FBME employees took various measures to obscure information. These 
facts distinguish FBME from other Cypriot banks and may have undermined 
the ability of U.S. financial institutions to detect all of FBME's 
suspicious activity,

[[Page 86579]]

underscoring the high likelihood that SARs involving FBME are actually 
under-inclusive. Given FinCEN's concern regarding FBME's willingness to 
evade AML regulations that may have inhibited the identification of 
suspicious activity by U.S. financial institutions, a comparison of 
SARs filed on FBME compared to other Cypriot financial institutions 
would not necessarily portray the relevant risk posed by FBME.
    More broadly, FinCEN notes that setting a benchmark as FBME 
suggests could simply set a target for banks or customers wishing to 
evade money laundering controls. Instead, the agency reviews relevant 
information and determines whether all of that information, taken 
together, justifies action under Section 311. FinCEN is daily immersed 
in the global flow of financial intelligence, including SARs, and is 
tasked as a policy matter with identifying concerns within that 
intelligence stream. As discussed above, FinCEN assesses that the 
volume of shell company activity reflected in the Administrative 
Record, including SARs filed on FBME, is substantial.

    Dated: November 23, 2016.
Jamal El-Hindi,
Deputy Director, Financial Crimes Enforcement Network.
[FR Doc. 2016-28752 Filed 11-30-16; 8:45 am]
 BILLING CODE 4810-02-P

Federal Register / Vol. 81, No. 231 / Thursday, December 1, 2016 / Rules and Regulations 86577

■ 3. In § 201.20, add paragraphs (c)(5) that order, the Court stated that the Northern District of Ohio; and (4)
through (7) to read as follows: agency had not responded meaningfully FBME’s facilitation of U.S. sanctions
to FBME’s comments regarding the evasion through its extensive customer
§ 201.20 Fees. agency’s treatment of aggregate base of shell companies, including at
* * * * * Suspicious Activity Report (SAR) data. least one FBME customer that was a
(c) * * * The Court found that those comments front company for a U.S.-sanctioned
(5) The Commission will not charge challenged FinCEN’s interpretation of Syrian entity, the Scientific Studies and
fees if it fails to comply with any time SAR data on at least four distinct Research Center, which used its FBME
limit under the FOIA or these grounds. In this supplement to the final account to process transactions through
regulations, and if it has not timely rule, FinCEN provides further the U.S. financial system.
notified the requester, in writing, that an explanation addressing FBME’s Set forth below are summaries of
unusual circumstance exists. If an comments. FBME’s four arguments in its comments
unusual circumstance exists, and timely surrounding FinCEN’s interpretation of
DATES: December 1, 2016.
written notice is given to the requester, SARs and the agency’s responses.
the Commission will have an additional FOR FURTHER INFORMATION CONTACT: The
1. FBME argues that SARs are so over-
10 working days to respond to the FinCEN Resource Center at (800) 767–
inclusive—‘‘sweeping in [so many]
request before fees are automatically 2825 or regcomments@fincen.gov.
transactions that are perfectly
waived under this paragraph. SUPPLEMENTARY INFORMATION: legitimate’’—that ‘‘categorically’’
(6) If the Commission determines that I. Background viewing SARs as indicative of illicit
unusual circumstances apply and that transactions is ‘‘invalid and improper.’’
more than 5,000 pages are necessary to In its September 20, 2016 order, the
In its January 26, 2016 comments,
respond to a request, it may charge fees U.S. District Court for the District of
FBME asserted that:
if it has provided a timely written notice Columbia remanded to FinCEN the final
rule imposing a prohibition on covered To paint FBME as posing a significant
to the requester and discusses with the threat to U.S. and other financial institutions,
requester via mail, Email, or telephone financial institutions from opening or
FinCEN relies on limited and misleading
how the requester could effectively limit maintaining correspondent accounts for, statistical data regarding ‘‘suspicious wire
the scope of the request (or make at least or on behalf of, FBME Bank, Ltd. transfers’’ as well as biased reports from
three good faith attempts to do so). (FBME). In its memorandum opinion financial institutions seeking to offload
(7) If a court has determined that accompanying that order, the Court responsibility for their own actions. During
stated that the agency had not the hearing before Judge Cooper, FinCEN
exceptional circumstances exist, a revealed that the statistical data relied upon
failure to comply with time limits responded meaningfully to FBME’s
comments regarding the agency’s in the NOF was based on SARs. But such
imposed by these regulations or FOIA reliance is categorically invalid and
shall be excused for the length of time treatment of aggregate SAR data. In this improper. To begin, we know of no instance,
provided by court order. supplement to the final rule, FinCEN prior to this proceeding, in which FinCEN
notes that FBME’s comments regarding has equated any particular SARs data or rate
* * * * * FinCEN’s use of SARs in the rulemaking as indicative of a problem under Section 311
By order of the Commission. process reflect a misunderstanding of [of the USA PATRIOT Act]. Nor is such use
Issued: November 25, 2016. SARs generally and how FinCEN valid. To the contrary, it ignores the purpose
Katherine M. Hiner, analyzed and used SARs in this of a SAR, which involves a designedly low
rulemaking. threshold for the sake of erring on the side
Acting Supervisory Attorney. of over-inclusion—sweeping in transactions
[FR Doc. 2016–28819 Filed 11–30–16; 8:45 am] As an initial matter, FBME overstates
that are perfectly legitimate, simply to ensure
BILLING CODE 7020–02–P
the centrality of the use of SARs in there is scrutiny of them to ensure against
FinCEN’s determination that FBME is of any issue. It is spurious in this light to take
primary money laundering concern. As a SAR or any number of them as evidencing
reflected in the agency’s Notice of the illegitimacy of any transaction or set
DEPARTMENT OF THE TREASURY
Finding (NOF), Final Rule, and thereof—not to mention as evidence that a
Administrative Record, far from being particular bank is one of ‘‘primary money
Financial Crimes Enforcement Network laundering concern’’ under Section 311.1
the only evidence that informed
31 CFR Part 1010 FinCEN’s determination that FBME is of Contrary to FBME’s assumptions,
primary money laundering concern, the FinCEN analyzed the SARs as
RIN 1506–AB27 agency’s analysis of SARs simply qualitative evidence of activity
affirmed FinCEN’s concern surrounding conducted by FBME that reflected one
Supplemental Information Regarding FBME’s involvement in money of FinCEN’s primary concerns about
the Final Rule Imposing the Fifth laundering that was informed by other FBME—specifically, a ‘‘[s]ignificant
Special Measure Against FBME Bank, information in the Administrative [v]olume’’ of ‘‘[o]bscured [t]ransactions’’
Ltd. Record. For instance, as detailed in the as indicated in part by the size and
AGENCY: Financial Crimes Enforcement NOF, this information included: (1) An number of ‘‘[w]ire transfers related to
Network (‘‘FinCEN’’). FBME customer’s receipt of a deposit of suspected shell company activities.’’
ACTION: Supplement to final rule. hundreds of thousands of dollars from NOF, 79 FR at 42640. While FinCEN
a financier for Lebanese Hezbollah; (2) recognizes that actual wrongdoing does
SUMMARY: In its September 20, 2016 providing financial services to a not necessarily underlie the suspicious
order, the U.S. District Court for the financial advisor for a major activity described in any particular
jstallworth on DSK7TPTVN1PROD with RULES

District of Columbia remanded to transnational organized crime figure; (3) SAR, many of the SARs relating to
FinCEN the final rule imposing a FBME’s facilitation of funds transfers to FBME described typical indicators of
prohibition on covered financial an FBME account involved in fraud shell company activity. As FinCEN has
institutions from opening or against a U.S. person, with the FBME explained, it is particularly concerned,
maintaining correspondent accounts for, customer operating the alleged fraud among other things, by the lack of
or on behalf of, FBME Bank, Ltd. In its scheme later being indicted in the
memorandum opinion accompanying United States District Court for the 1 FBME’s January 26, 2016 Comments, pp. 50–51.

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86578 Federal Register / Vol. 81, No. 231 / Thursday, December 1, 2016 / Rules and Regulations

transparency associated with institution of primary money laundering liquidity challenges by financial
transactions by FBME’s shell company concern pursuant to Section 311 even if institutions. FinCEN did not rely on any
customers, and the high volume of U.S. it has extensive legitimate activities. suggestion that the number of SAR
dollar transactions conducted by these FinCEN considered the volume of filings involving FBME increased during
shell companies with no apparent suspicious transactions in absolute the Cypriot financial crisis as compared
business purpose. March 31, 2016 Final terms—not whether such money to past periods in the analysis. In
Rule, 81 FR at 18487. Therefore, when laundering was a greater percentage of addition, FinCEN finds no reason to
reviewing SARs associated with such FBME’s activities than that suggested in assume that any renewed focus on
activity, FinCEN appropriately FBME’s comments. FBME’s comment Cypriot financial controls would
concluded that they were indicative of incorrectly assumes that FinCEN’s focus decrease rather than increase the
potential money laundering. In addition in the NOF was, or should have been, credibility of SAR filings as to FBME, let
to the SARs as well as other information based upon a percentage of suspicious alone decrease the credibility of those
available to FinCEN discussed in the activity by FBME’s customers. To the filings to such an extent as to
NOF and Final Rule, the agency’s contrary, FinCEN made clear it was undermine its finding of a substantial
concerns were supported by FBME’s concerned by the substantial volume of volume of shell company activity at
own acknowledgement in its January 26, all suspicious activity at the bank, FBME. Finally, the NOF highlighted
2016 comment that it transacted with including the suspicious activity suspected shell company activities
shell companies. reported in SARs and that described in accounting for hundreds of millions of
Moreover, with respect to FBME’s other sources available to the agency dollars between 2006–2014; 5 such
claim that SARs are over-inclusive, and included in the Administrative activity was not limited to the period of
based on FinCEN’s extensive experience Record. The overall amount of such the Cypriot financial crisis.
with SAR filings and the other illicit activity informed FinCEN’s evaluation 4. FBME faults FinCEN for failing to
conduct at FBME detailed in the NOF, of the ‘‘extent to which’’ FBME has been provide either a ‘‘point of comparison
Final Rule, and Administrative Record, ‘‘used to facilitate or promote money between FBME and other * * * banks
FinCEN assesses it more likely that the laundering’’ 3 and its conclusion that that [the agency] considers similarly
SARs understate the size and frequency ‘‘FBME facilitated a substantial volume situated but less deserving of suspicion
of shell company and other suspicious of money laundering through the bank given their SAR statistics,’’ or ‘‘any
activity conducted by FBME. The SARs for many years.’’ 4 FinCEN finds the baseline for the SARs statistics it
include only the information that opportunity for money laundering of considers standard or acceptable for an
financial institutions identified and such a magnitude and through so many international bank like FBME.’’
reported to FinCEN; they do not transactions to be ‘‘substantial’’ because, Again, FBME misunderstands the role
necessarily reflect all suspicious in absolute terms, it poses a significant that SARs played in FinCEN’s analysis,
transactions engaged in by FBME. threat to the U.S. and international incorrectly assuming that the analysis
FinCEN assesses that such is the case financial systems, potentially allowing necessarily depended on a relative
here given FinCEN’s determination that large amounts of funding to pass to comparison to other banks. FBME
FBME has sought to evade anti-money terrorist or criminal activity. FinCEN appears to assume that SAR filings, or
laundering (AML) regulations, has does not find that the size of a bank that the absolute number and size of
ignored the Central Bank of Cyprus’ facilitates a substantial amount of suspicious transactions described in
AML directives, and that following the money laundering is determinative of such filings, are not in themselves
issuance of the NOF, FBME employees the threat posed by that activity. relevant, but instead that only relative
took various measures to obscure Adopting such an assumption would SAR rates among banks can be an
information, all of which may have essentially permit significant volumes of indication of significant suspicious
undermined the ability of U.S. financial money to pass through large banks. In activity. FinCEN finds this assumption
institutions to detect and report all of any event, for the reasons described in unwarranted. FinCEN found that the
FBME’s suspicious activity. the preceding section, FinCEN assesses SAR filings discussed in the NOF
2. FBME argues that while the that it is more likely that, if anything, informative of significant shell company
absolute dollar amounts of transactions the SARs understate the size and activity at FBME to be ‘‘substantial’’
tagged as ‘‘suspicious’’ might appear frequency of suspicious activity because, in absolute terms, it poses a
high on the surface, they represented a conducted by FBME. significant threat to the U.S. and
small proportion of FBME’s overall 3. FBME criticizes FinCEN for international financial system,
transactions. ‘‘fail[ing] to consider alternative bases potentially allowing large amounts of
FBME notes that while the NOF for the increase in SARs involving funding to pass to terrorist or criminal
highlighted ‘‘at least 4,500 suspicious FBME * * * between April 2013 and activity. This conclusion did not
wire transfers through U.S. April 2014,’’ particularly the ‘‘Cypriot depend on comparison with other
correspondent accounts that totaled at financial crisis and attendant controls.’’ banks.
least $875 million between November FinCEN recognizes that suspicious In addition, as noted in the NOF and
2006 and March 2013,’’ that figure activity and reports of such activity Final Rule, FinCEN concluded that
represented, according to FBME, ‘‘only could be influenced by a number of FBME has sought to evade AML
0.55% of the total amount of transfers factors, including financial regulations, has ignored the Central
and 0.81% of the [U.S. dollar] amount developments within a country or Bank of Cyprus’ AML directives, and
of transfers conducted by FBME during internationally, but FinCEN views this that following the issuance of the NOF,
this period.’’ 2 In other words, FBME scenario as inapplicable in this case. FBME employees took various measures
jstallworth on DSK7TPTVN1PROD with RULES

asserts without supporting evidence that SARs typically deal with suspicious to obscure information. These facts
the SARs reflect a small portion of the activity by individuals and entities distinguish FBME from other Cypriot
bank’s total transactions. But the final conducting transactions, not systemic banks and may have undermined the
rule never suggested otherwise; FinCEN issues involving debt defaults and ability of U.S. financial institutions to
may identify a bank as a financial detect all of FBME’s suspicious activity,
3 31 U.S.C. 5318A(c)(2)(B)(i).
2 FBME’s January 26, 2016 Comments, p. 52. 4 79 FR 42639 (July 22, 2014). 5 79 FR 42639 at 42640 (July 22, 2014).

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Document Created: 2018-02-14 09:00:30
Document Modified: 2018-02-14 09:00:30

Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Rules and Regulations
Action		Supplement to final rule.
Dates		December 1, 2016.
Contact		The FinCEN Resource Center at (800) 767-2825 or [email protected]
FR Citation		81 FR 86577
RIN Number		1506-AB27

81 FR 86577 - Supplemental Information Regarding the Final Rule Imposing the Fifth Special Measure Against FBME Bank, Ltd.

DEPARTMENT OF THE TREASURYFinancial Crimes Enforcement Network

Federal Register Volume 81, Issue 231 (December 1, 2016)

DEPARTMENT OF THE TREASURY
Financial Crimes Enforcement Network