FinCEN Announces Innovation Hours Program
On May 24th, the Financial Crimes Enforcement Network (FinCEN) announced its new Innovation Hours Program. The new program is designed to facilitate innovative approaches to combating money laundering and terrorist financing. In its announcement, FinCEN stated the program is intended to provide opportunities for both financial institutions and financial technology (FinTech) companies to discuss Bank Secrecy Act (BSA)-related innovations.
According to a 2017 survey of community banks, compliance with BSA was ranked as the costliest of all regulations. Technology-related innovation can help improve the financial sector’s ability to comply with BSA and Anti-Money Laundering (AML) requirements, including suspicious activity reporting (SAR), risk identification, and transaction monitoring. Technology can also assist regulators and law enforcement in better targeting resources to detect illegal activity.
The program is open to anyone, including financial institutions and technology service providers, who offer or use products to comply with BSA/AML requirements and can demonstrate that the innovation either enhances a financial institution’s compliance program or improves the information available to law enforcement to safeguard the US financial system. Anyone interested in participating in the program must also not be subject to any criminal or civil enforcement action.
What You Should Know
Companies offering an innovative solution for BSA/AML compliance are encouraged to request a meeting during the innovation hours which will be on the second Thursday of each month from 9:30 to 12:30 in the Washington, DC area. Applicants should apply using the request form. When filling out the online form, consider the following:
Tell your story. In the FAQs, FinCEN states that if you meet the qualifying criteria, it may request additional information, including your company history, your technical portfolio, and technical readiness. You may want to include some relevant information about you and your company in the online request summary. You should have more detailed information ready to provide to FinCEN when requested.
Be specific. Stay away from general claims about your product or service. Instead, be very specific as to what problem your product or service solves. Regulators will be much more open to learning about your product (and less suspicious) if you give concrete examples of its benefits.
Don’t complain. Don’t use this as an opportunity to complain about regulations or regulatory burden. Regulators hear these complaints all the time. If there is a law or regulation that is a barrier to your ability to effectively deploy your product, you should describe that during your meeting. FinCEN will likely appreciate hearing how their regulations might impede innovation, particularly if you are specific and give examples.
The Innovation Hours Program is part of a larger initiative – introduced at the American Bankers Association/American Bar Association Financial Crimes Enforcement Conference last December – to spur BSA/AML innovation among financial institutions. FinCEN has stated that it is interested in fostering a better understanding of both the opportunities and challenges associated with innovation related to compliance with BSA/AML. In December, FinCEN and the federal banking agencies issued a “Joint Statement on Innovative Efforts to Combat Money Laundering and Terrorist Financing.” That statement encourages financial institutions to consider and, when appropriate, implement responsible innovations designed to enhance BSA/AML compliance obligations and safeguard the nation’s financial system.