Sharing SAR's: Some Proposed Changes

FinCEN has announced proposed changes to BSA's regulations on SAR sharing and confidentiality rules. Since they're now just proposals subject to comment, I won't detail every change, but here's my summary:

The guidance on sharing with parent entities will remain intact--it will be built into the regulation so as to be all the more official. Here is the original guidance from January 2006: http://www.fincen.gov/statutes_regs/guidance/html/sarsharingguidance01202006.html You remember that it allowed BD's to share a SAR or the existence of a SAR with a holding or parent company, but not with affiliates. The guidance required that a confidentiality agreement be place with the holding co/parent entity.

BD's will now be allowed to share a SAR or the existence of a SAR with affiliate entities--that is, only if those entities are subject to SAR rules (i.e., banks, BD's, mutual funds, thrifts, insurance co's, casinos, money service business--not IA's or unregistered investment companies). BD's can only share this stuff if they filed the SAR and the affiliates can't go on to share the information with others (it's not like Facebook: 'friends of friends' don't get to see stuff...). Like with parent entities, confidentiality agreements should be in place when sharing with affiliates.

Other changes clarify some things that you might have otherwise assumed, like: the sharing prohibition applies to all employees, directors, agents, etc. (not just the firm); BD's can share SAR's or the existence of SAR's with their examining authorities; and BD's and their employees can share the information, facts, and documents underlying a SAR a) with financial institutions for the sake of filing a joint SAR and b) in connection with certain employment references or termination notices.

I would think FINRA would provide an announcement when these changes go into effect, so look for a Notice in the coming months. For the proposals and guidance, go to: http://www.fincen.gov/statutes_regs/frn/pdf/frnSAR_Confidentiality.pdf and http://www.fincen.gov/statutes_regs/frn/pdf/frnSF_SAR_Sharing.pdf .