Financial Crimes Enforcement Network is a US Department of Treasury authorized government bureau. The bureau, created in 1990, aims to prevent money laundering in the USA.
FinCEN consists of three key players– the regulatory community, the financial services community, and law enforcement agencies.
FinCEN represents the USA in the Egmont Group, which has over 100 FIUs. Financial Intelligence Units work together in an international network to exterminate financial crimes. Headed by acting president Himamauli Das, the US FIU derives its duties from Congress.
FinCEN regulates financial institutions in the US by maintaining, analyzing, and disseminating financial data. It also tells these institutions about possible suspects and suspicious activities.
With the USA Patriot Act 2001 passing, FinCEN’s power grew to new levels. Agencies process the data collected by the bureau to make recommendations. Not only this, the bureau can also issue regulations for smooth supervision.
The motive behind the installation of FinCEN is to follow the money to its roots. Criminals committing financial crimes leave traces behind, which FIUs then monitor. These FIUs work towards detecting financial crimes of the smallest degree to the highest.
Financial Crimes Enforcement Network work in many ways, including:
– Detection and monitoring of domestic and global financial threats.
– Closely check financial terrorism, money laundering, and financial crimes.
– Reporting and suggesting to the Department of Treasury.
– Coordination with foreign FIU on anti-money laundering and financial terrorism.
– Analyze data to support lawmakers, regulatory agencies, and the financial service community.
– Issue and regulate laws issued by the applicable statute.
Another major role this government bureau plays is assisting financial institutions. After the issue of the Bank Secrecy Act in 1970, AML/AFT/AFCs became part of the regulatory framework for banks.
Besides functioning as a regulator, FinCEN also imposes certain obligations on banks. Banks should adhere to the following obligations to support the smooth functioning of FinCEN:
– Banks should ensure verification of KYC requirements.
– Complying with anti-money laundering practices.
– To report doubtful transactions to FinCEN.
– Determine customer’s due diligence.
– To keep its customer’s financial records for a certain period.
FinCEN can charge a penalty if a financial institution does not adhere to the AML regulations.
Keeping in view the genesis of its formation, FinCEN is working towards attaining secured IT practices. For this, FIU has launched FinCEN’s Bank Secrecy Act (BSA) Information Technology (IT) Modernization Program. The program will focus on better data collection, storage, analysis, and safeguard policies.
Many Federal, State, and Local agencies will benefit from this program. The main idea behind the launch is to restore confidence in financial security. It also aims at developing a reliable information management system. Also, it will provide its users with better tools to improve data quality.
Furthering its scope, FinCEN and FDIC announced Tech Sprint Program in January. Participants will be able to provide effective digital identity-proofing solutions.
This way, the FDIC tech labs, and FinCEN can increase account security and detect frauds. During the Tech Sprint Program, participants will work in groups to develop solutions. After this, participants will go through a panel evaluation on the Demo Day.
The winning team will receive an undisclosed prize after the declaration of the results.
FinCEN has been working for the betterment of trust in digital banking in the US. It is also promoting financial transparency and a financial crime-free economy.
Nancy J. Allen is a crypto enthusiast and believes that cryptocurrencies inspire people to be their own banks and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning.
Source: https://www.thecoinrepublic.com/2023/05/21/a-brief-look-into-the-history-of-fincen-us-aml-regulatory-bureau/