FinCEN Compliance Lawyer

The primary functions of FinCEN:

FinCEN operates as a separate division within the U.S. Department of the Treasury. Its activities are organized through several key elements. The Data Analysis Division is responsible for processing and interpreting financial information. The Legal Division ensures compliance with laws and regulatory standards. The Technology Division develops and maintains platforms for data collection and analysis.

In the USA, the foundation for combating financial crimes is a series of legislative acts aimed at preventing money laundering offenses, financing terrorism, and other illegal operations.

The Bank Secrecy Act (BSA) is a law enacted in 1970 that requires financial entities to report suspicious activities and file reports on large transactions. This law serves as the foundation for monitoring financial flows and detecting illegal activities.

The Patriot Act, passed in 2001, strengthens measures to combat the financing of terrorism and requires financial organizations to implement stricter anti-money laundering programs.

The Anti-Money Laundering Act (AML) is a law aimed at combating money laundering. It supplements and expands upon previous regulations, setting stricter requirements for financial organizations, including mandatory customer due diligence (KYC).

The Foreign Account Tax Compliance Act (FATCA) is a law that requires foreign financial institutions to provide information about accounts held by American taxpayers. This helps in identifying tax evasion.

FINCEN enforcement mechanisms consist of a set of tools and procedures to ensure compliance with financial laws, prevent crimes, and protect the U.S. financial system. It operates under the auspices of the U.S. Department of the Treasury and is one of the key agencies responsible for ensuring legality in the financial sector. It employs analytical, supervisory, and sanction measures to prevent the use of the financial system for illegal purposes.

Financial entities are required to file reports on suspicious transactions (Suspicious Activity Reports, SAR) and large transactions (Currency Transaction Reports, CTR). These data are submitted to the FinCEN analytical database, where they are processed using advanced technologies to identify suspicious patterns.

FinCEN monitors financial activity and shares data with law enforcement agencies to investigate suspicious cases. The agency also provides support in uncovering complex federal financial crimes through interagency and international cooperation.

FinCEN is developing standards and requirements for AML (Anti-Money Laundering) programs that must be implemented by all financial organizations. This includes customer due diligence (KYC – Know Your Customer), internal controls, and regular audits.

The agency has the authority to impose fines on organizations and individuals who violate financial crime laws. For example, significant financial penalties can be applied for insufficient compliance with AML (Anti-Money Laundering) procedures or failure to meet reporting requirements.

Violating the requirements results in civil penalties like fines. Additionally, FinCEN has the authority to initiate investigations against companies and individuals. In cases of serious violations, criminal charges can result in severe consequences, including prison sentences for those responsible.

Individuals found in violation of FinCEN requirements may face bank account suspension, asset freezing, or revocation of their business licenses.

AML (Anti-Money Laundering) refers to a comprehensive set of measures, procedures, and rules aimed at preventing money laundering and the financing of terrorism. The term AML encompasses a wide range of activities, including the identification of suspicious transactions, customer verification, and the implementation of internal policies to comply with international and national laws.

Every company needs to analyze potential risks associated with customers, operations, business geography, and the products used. Continuous monitoring of financial transactions helps to identify suspicious activities (for example, volumes or frequencies of transactions that are unusual for a client). Upon detecting suspicious transactions, companies are required to report to the relevant authorities like the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).

Having an AML program is a mandatory requirement for financial entities and many other organizations that deal with monetary funds. Our financial crimes lawyers are ready to assist your business in developing and implementing an effective AML program, conducting risk assessments, and providing legal counsel in the event of audits and investigations.

KYC (Know Your Customer) is a process for verifying clients, aimed at confirming their identity, assessing their trustworthiness, and identifying potential risks associated with financial transactions. KYC programs are used by banks, financial organizations, and other companies dealing with money to comply with international and national AML/CFT standards.

The KYC (Know Your Customer) process is based on collecting, verifying, and analyzing data about clients. The primary goal is to ensure that the client is legitimate and not involved in illegal activities. The program consists of the following stages:

KYC is not a one-time process. Companies are required to regularly update customer data and monitor their financial activity for any suspicious transactions.

SARs (Suspicious Activity Reports) are reports on suspicious activities that financial organizations and other entities are required to submit to regulatory bodies when they detect suspicious transactions or activities. The purpose of filing SARs is to identify, prevent, and investigate financial crimes.

The process of filing SARs is based on the obligation of financial institutions to report any activity that appears suspicious or deviates from a client’s usual behavior:

After detecting suspicious activity, all available information about the client and transactions is gathered, including full name and identification details, transaction specifics (amounts, dates, locations), as well as the reasons why the transaction is considered suspicious.

The form includes all collected data, as well as a brief description of the suspicious activity and the reason for filing the report. In the United States, SARs are submitted through FinCEN using an electronic reporting system. In other countries, the report is sent to the relevant regulatory authorities. Companies are required to provide additional information upon request from law enforcement or regulatory agencies.

The obligation to file SARs applies to: banks and financial entities, insurance companies, payment systems and electronic wallet providers, cryptocurrency exchanges, brokerage and investment firms, lotteries, and gambling operations.

Violating FinCEN regulations can lead to hefty fines, legal proceedings, and even criminal penalties like imprisonment. Our firm offers a full range of legal services for organizations operating in the financial sector:

Adhering to FinCEN regulations strengthens a company’s reputation, reduces the risk of fines and sanctions, ensures transparency in financial transactions, and protects the business from legal and reputational risks.

Our lawyers work closely with companies around the world, so we tailor legal solutions to the specifics of your business. Our team of financial crimes lawyers has extensive experience with FinCEN legislation and financial law. Major financial entities, investment companies, and startups trust us, valuing our competence and responsibility.

Don’t risk your business, contact us right now, to receive an initial consultation and discuss the next steps for compliance with FinCEN requirements. Start collaborating with leading experts in federal crimes and financial law!