Factoring in FinCEN's Enforcement Factors

While credit unions are probably familiar with NCUA’s enforcement authority, FinCEN has authority over credit unions as well. FinCEN’s authority stems from it having “overall authority for enforcement and compliance of the Bank Secrecy Act.” Credit unions should note that this enforcement authority is in addition to NCUA’s authority and it is possible that a credit union can experience an enforcement action from both NCUA and FinCEN. 

To catch a glimpse into FinCEN’s views on enforcement, BSA professionals may want to review the agency’s published statement on “the Enforcement of the Bank Secrecy Act.” According to the statement, it “describes FinCEN’s approach to enforcing the Bank Secrecy Act.” While the statement does not create a standard of conduct for FinCEN, it does discuss the factors FinCEN uses in order to determine an appropriate enforcement response for actual or possible violations of the BSA.

In the statement, FinCEN outlines the following six possible actions that it can take for actual or possible violations:

  1. No action;
    1. FinCEN may choose not to take further action over a BSA violation; however, FinCEN does reserve the right to reopen a case if new information comes to light.
  2. Warning letter;
    1. FinCEN may issue an official warning letter.
  3. Equitable remedy;
    1. FinCEN can seek an injunction or equitable relief in order to enforce compliance.
  4. Settlement;
    1. FinCEN can seek a settlement with a credit union that may include civil money penalties and remedial undertakings.
  5. Civil money penalty;
    1. FinCEN can assess a civil money penalty.
  6. Criminal referral;
    1. Under certain circumstances, FinCEN can refer a matter to appropriate law enforcement for a criminal investigation and/or prosecution.

When deciding what course of action to take, FinCEN “considers both compliance with specific BSA requirements—such as registration, recordkeeping, and reporting requirements—as well as the adequacy of an anti-money laundering (AML) program, including the extent of the AML program’s compliance with pillar requirements.” FinCEN further lists the following ten factors it considers when deciding on a course of action:

  1. Nature and seriousness of the violations;
    1. This includes the extent to which the violation harms the public and the amounts involved in the violation.
  2. The impact the violations have on FinCEN’s mission to safeguard the financial system;
  3. The pervasiveness of the wrongdoing within the credit union;
    1. The extent to which management was aware of the violation and whether they were condoning the underlying conduct.
  4. The history of similar violations or misconduct;
  5. The financial gain the credit union received from the violations;
  6. Whether there was prompt and effective action to terminate the violations upon discovery and whether the credit union performed any remedial measures on its own initiative;
  7. Whether the violations were timely and voluntarily disclosed to FinCEN;
  8. The quality and extent of cooperation with FinCEN;
  9. The systemic nature of the violations, including but not limited to;
    1. Number of violations;
    2. Extent of violations;
    3. Failure rates; and
    4. Duration of the violations.
  10. Whether NCUA took enforcement action for a related activity;
    1. FinCEN considers the amount of any penalty, fine, forfeiture, and/or any remedial action ordered.

One of the best ways to understand the above factors is to take a look at actual FinCEN enforcement actions. For example, the most recent enforcement action, which was a settlement, was issued on October 10, 2024 against TD Bank, N.A. (TD Bank). In the consent order, FinCEN provides a detailed account of how TD Bank’s actions fit into the above factors and the ultimate penalty. For example, for the “financial gain” factor FinCEN emphasized how TD Bank consistently spent less than its peers on its AML compliance program and gained an advantage over its peers. In the “impact or harm of the violations” factor, we learn that FinCEN views suspicious activity reports as “one of the most important tools to FinCEN and law enforcement in fighting financial crime.”

It is language like this and the fact patterns in an enforcement action that a BSA professional can take to management to hit home why their recommendations are important and relevant. No one wants to be the subject of an enforcement action.

For more information on this subject and the enforcement factors, BSA professionals can review recent enforcement actions. Professionals may also want to review Appendix R to the BSA/AML Manual. Appendix R provides enforcement guidance via a joint statement from the Federal Reserve, FDIC, NCUA, and OCC. This statement will provide a more detailed look into NCUA’s view on BSA/AML enforcement.

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