The Financial Crimes Enforcement Network (FinCEN) is a bureau of the United States Department of the Treasury that administers the Bank Secrecy Act (BSA), the country's principal anti-money-laundering law. FinCEN writes the regulations that require financial institutions to maintain anti-money-laundering programs, keep records and file reports; it receives and analyzes those reports as the US financial intelligence unit; and it maintains the federal registry of money services businesses (MSBs). It also has civil enforcement powers and can impose penalties for BSA violations.
FinCEN is headquartered in the Washington, D.C. area and is led by a director appointed by the Secretary of the Treasury. For the agency's full profile, see the FinCEN regulator profile.
History
FinCEN was established by Treasury order in 1990 to provide financial intelligence to law enforcement agencies. In 1994 the Treasury delegated to it the administration of the BSA, and the USA PATRIOT Act of 2001 made it a formal bureau of the Treasury and expanded its authority, including its power to require special measures against jurisdictions and institutions of primary money laundering concern under section 311. The Anti-Money Laundering Act of 2020 further broadened its mandate, and the Corporate Transparency Act, enacted as part of the same legislation, made FinCEN responsible for a database of beneficial ownership information, whose scope was later narrowed to exclude most US companies.
Functions of FinCEN
Rule-making
FinCEN issues the regulations, codified in Chapter X of Title 31 of the Code of Federal Regulations, that apply the BSA to banks, broker-dealers, casinos, insurance companies, MSBs and other sectors. These rules define who is covered, require an AML program, set customer identification and due diligence requirements, and impose recordkeeping obligations such as the funds transfer recordkeeping and "travel" rules for transfers of USD 3,000 or more.
Reporting
Financial institutions file reports with FinCEN through its BSA E-Filing system. The most important are the suspicious activity report (SAR), required of MSBs for suspicious transactions of USD 2,000 or more and of banks generally at USD 5,000 or more, and the currency transaction report (CTR) for cash transactions above USD 10,000 in a day. Breaking transactions up to avoid the CTR threshold is the separate crime of structuring.
MSB registration
Most MSBs, including money transmitters, check cashers, currency dealers and providers and sellers of prepaid access, must register with FinCEN within 180 days of beginning operations and renew every two years. Registration is not a license and carries no approval; it is a notification. Firms must also obtain state licenses where required, such as a money transmitter license. MSBs located abroad that do business substantially in the United States register as a foreign money services business. The process is described under FinCEN registration.
Intelligence and international cooperation
As the US financial intelligence unit, FinCEN analyzes reporting data and shares it with law enforcement, issues advisories on emerging typologies, and exchanges information with foreign counterparts through the Egmont Group, of which it was a founding member. It also administers information-sharing programs under sections 314(a) and 314(b) of the PATRIOT Act.
Enforcement and examinations
FinCEN can impose civil money penalties for BSA violations, often alongside other regulators. It has penalized banks, casinos, MSBs and, in recent years, virtual currency businesses. Day-to-day examination is largely delegated: federal banking agencies examine banks, the Securities and Exchange Commission oversees broker-dealers, and the Internal Revenue Service examines many non-bank financial institutions, including MSBs, in what is often called an IRS Title 31 audit. FinCEN works with the Treasury's Office of Foreign Assets Control, which administers sanctions, though the two have separate legal authorities.
Relationship with state regulators
Money transmission in the United States is regulated at both levels. FinCEN sets federal AML requirements and registration, while state regulators license transmitters, examine their safety and soundness, and frequently examine BSA compliance as well. Multistate examinations are coordinated through the Conference of State Bank Supervisors, and states such as New York, through NYDFS, apply additional rules of their own.
Criticism
FinCEN has been criticized for the volume of reports it receives relative to the feedback it provides to filers, for outdated technology, and for the compliance burden its rules impose on small institutions. Leaks of SAR data published in 2020 as the "FinCEN Files" prompted debate over how effectively reports are used. The AML Act of 2020 directed FinCEN to modernize reporting and to set national AML priorities.