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FinCEN, OFAC and TFI Curtailed by Partial Government Shutdown

As reported in Reuters and other media outlets, the partial government shutdown has impaired the ability of the U.S. Treasury to maintain many of its anti-money laundering and counter-terrorist financing (“AML/CTF”) efforts.  Specifically, the Financial Crimes Enforcement Network (“FinCEN”), the Office of Foreign Assets Controls (“OFAC”) and the Office of Terrorism and Financial Intelligence (“TFI”) have implemented a “lapse in appropriations contingency plan.”

Reuters summarizes the situation regarding FinCEN and OFAC as follows, and provides links to the relevant government announcements:

[FinCEN] will not be working on regulatory guidance or rulemaking as its normal workforce of 285 employees is slashed to 130, according to a document posted on Treasury’s website [here].

It also will not be providing public speakers for AML events, nor will it respond to routine requests for financial intelligence submitted by foreign law enforcement agencies.

FinCEN will, however, continue to provide financial intelligence to U.S. law enforcement and intelligence agencies in support of money laundering and terror finance investigations, the document states. It also will continue to maintain the IT systems that banks and other financial institutions use to file Suspicious Activity Reports and other filings required by the Bank Secrecy Act.

“Forgoing these critical functions may prevent law enforcement and intelligence agencies from receiving timely information related to potential terrorism or ongoing crimes which potentially compromises safety of life and property,” the document states.

[OFAC] will also continue updating its sanctions blacklist during the shutdown, separate Treasury guidance states [here].

Further, according to a separate Treasury document, TFI will continue to perform the following functions during a lapse of appropriations:

  • Monitor and disseminate intelligence reporting on anticipated or actual events to Treasury leadership and other law enforcement, intelligence and military authorities; maintain SCI/collateral communication connectivity with NSC and intelligence community (Watch Officers excepted for protection of life and property)
  • Administer the Specially Designated Nationals (SDN) list and enforce economic and trade sanctions as directed by the Secretary
  • Implement and administer new sanctions on foreign countries or targeted individuals or entities through newly issued Executive Orders (EO) as directed by the Secretary
  • Develop and provide policy recommendations in response to national security incidents as directed by the Secretary
  • Participate in national security policy and intelligence forums responsible for development of response to any national security incident (e.g., NSC Counterterrorism Security Group) as directed by the Secretary
  • Ensure continuity of key regulatory and enforcement actions to preclude exploitation by adversaries during national security event/emergency
  • Limited communications with financial sector participants, including finance ministries and central bank authorities of foreign states, regarding threats and emergent conditions, as directed by the Secretary
  • Limited IT support to service those positions excepted from furlough
  • Limited handling of incoming inquiries (Hotline calls)
  • Limited analytic support (Bank Secrecy Act data, intelligence information, and international financial intelligence unit information including Egmont Secure Web (ESW) case support) to federal law enforcement agencies
  • Use of Section 314 (a) Patriot Act authority, which enables federal law enforcement agencies, through FinCEN, to reach out to financial institutions to locate accounts andtransactions of persons that may be involved in illegal activity
  • Operations funded by other than annual appropriations, including [the Treasury Executive Office for Asset Forfeiture].
Copyright © by Ballard Spahr LLPNational Law Review, Volume IX, Number 5
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About this Author

 Peter D. Hardy, Ballard Spahr, Philadelphia lawyer, White Collar Defense lawyer, Internal Investigations, Consumer Financial Services, Privacy and Data Security, Tax
Partner

Peter Hardy advises corporations and individuals in a range of industries against allegations of misconduct—including tax fraud, money laundering, Bank Secrecy Act, mortgage fraud and lending law violations, securities fraud, health care fraud, public corruption, Foreign Corrupt Practices Act violations, and identity theft and data breach.

Mr. Hardy has extensive trial and appellate court experience. He oversees internal investigations, advises in potential disclosures to the Internal Revenue Service, and has litigated complex criminal matters at the trial and appellate levels. He...

215.864.8838
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