The deadline by when the U.S. Treasury Department's Financial Crimes Enforcement Network (FinCEN) needs to receive public comments as to how it might best "streamline, modernize, and update" the United States' existing anti-money laundering and countering financing of terrorism (AML/CFT) regime is fast approaching, advocates of a change in these regulations have told the American Expat Financial News Journal.
FinCEN says the deadline for it to have received all comments on the matter is Feb. 14,(aka Valentines Day).
The agency, which is a part of the U.S. Treasury, says it is particularly interested in hearing suggestions as to how it might modernize its current risk-based AML/CFT regulations and guidance, originally issued in response to the Bank Secrecy Act (BSA) of 1970, so that it might "[continue to] protect U.S. national security in a cost-effective and efficient manner."
This RFI (FinCEN for "request for information") is also intended to "support FinCEN’s ongoing formal review of BSA regulations and guidance," as required by the Anti-Money Laundering Act of 2020, FinCEN says.
In a notice posted last December on the Federal Register's website (where it takes up the better part of seven pages), FinCEN explains that it would like to hear about "new and innovative approaches to BSA compliance that promote a risk-based approach to protecting the financial system from threats to national security posed by various forms of financial crime, including money laundering, the financing of terrorism and proliferation, while also providing for the reporting of information with a high degree of usefulness to government authorities."
"FinCEN recognizes the evolving illicit finance threat landscape and appreciates the important role that technology, innovation, and the efficient application of resources to BSA reporting play in promoting a risk-based approach to BSA compliance," it adds.
"In this context, the efficient application of resources can refer to the prioritization of resources by financial institutions to provide more useful information to law enforcement or other U.S. government entities, including [the] reporting [of] highly useful information in a timely manner, or reducing redundancies and information of little use reported to law enforcement or other U.S. government entities."
Democrats Abroad: Focus on FBAR regime
Among the organizations that have thus far responded to FinCEN's request for comments on its AML/CFT regime has been the Democrats Abroad's Global Taxation Task Force.
In its 15-page submission last month, the TTF begins by noting that ever since the Bank Secrecy Act was signed into law in 1970, "U.S. citizens living abroad have increasingly become caught up in ongoing efforts against tax evasion and malicious actors."
It continues: "While we recognize the importance of continued efforts, we believe that substantial adjustments to the Report of Foreign Bank and Financial Accounts (FBAR) are needed to ensure that the impact to ordinary law-abiding citizens is proportional to the financial law enforcement benefits.
"Our specific recommendations, with rationale elaborated on in the responses to specific questions, are intended to help FinCEN achieve that proportionality, while simultaneously improving FBAR’s effectiveness as a law enforcement tool."
The TTF goes on to list its key recommendations, which include:
● A one-time adjustment of FBAR reporting thresholds to $70,000, which accounts
for inflation in the 50 years since FBAR’s introduction, followed by annual inflation
○ An exemption of non-residents from reporting OR
○ A significantly higher reporting threshold for non-residents on the order of
● A partial repeal of FBAR reporting under the BSA, noting that it is highly redundant with both self-reporting provisions (IRS Form 8938) and automatically reported data (FATCA IGA data exchange).
We note that this has been a recurring point of feedback from the IRS National Taxpayer Advocate for multiple years.
● Improving the proportionality of enforcement/penalties for FBAR violations and clearly defining willful vs. non-willful recommendations.
We note that this has also been a point of feedback from the IRS National Taxpayer Advocate.
● Restoration of paper FBAR filings and improvement of e-Filing options, to allow popular tax-filing software to include FBAR e-filing.
● Exclusion of accounts under a de minimis threshold, even when the reporting obligations are triggered based on aggregate foreign bank account balances.
● For non-residents, exclusion of accounts where a U.S. Person only has signatory authority on the account, but in which they have no beneficial interest.
Adds the Democrats Abroad Taxation Task Force submission: "At the present, FBAR reporting is redundant, disproportionate to risk, and it fails to take into account the necessities of holding foreign bank accounts when residing outside of the United States.
"At the same time, enforcement efforts are generally disproportionate, with FinCEN exercising little discretion and often pursuing statutory-maximum penalties, even for infractions deemed non-willful.
"This results in highly, highly, regressive penalties that disproportionately harm the middle and working classes."
How to submit comments
Those interested in submitting comments electronically are told they should do so by going to the Federal E-rulemaking Portal, at www.regulations.gov, and following the instructions, referring where necessary to "Docket Number FINCEN-2021-0008."
By mail, they should send their comments to the following address: Policy Division, Financial Crimes Enforcement Network, P.O. Box 39, Vienna, Virginia 22183. Here too, they should refer to "Docket Number FINCEN-2021-0008."
Established in 1990, FinCEN is tasked with collecting and analyzing information about individual as well as corporate financial transactions in such a way as to help the government to combat domestic and international money laundering, terrorist financing, and other financial crimes.
- FBARs (FinCEN Form 114s), Form 8938s and Form 8966s: not just one but three ways Uncle Sam monitors Americans’ overseas holdings
- FinCEN seeks comments on program to enable U.S. financial companies to share 'suspicious activity reports' with their overseas affiliates
- Nat'l Taxpayer Advocate, in annual report: 'Harmonize reporting requirements for taxpayers subject to both FBARs and FATCA'
- FinCEN issues draft of new beneficial ownership rule 'to counter illicit finance, increase transparency'
- FinCEN seeks public comment on new regs for the antiquities trade