OCC Issues Final Rule Allowing for SAR Exemptions

The OCC recently issued a final rule which amends the OCC’s suspicious activity report (SAR) regulations and allows the agency to exempt certain financial institutions from the requirements of SAR regulations upon written request.  The final rule harmonizes the OCC’s legal authority with the exemption authority of FinCEN.  In light of developing financial technology and innovation, the “regulatory flexibility” afforded by this final rule enables the OCC to grant exemptive relief to national banks and Federal savings associations or service corporations that use novel or innovative approaches to SAR monitoring, investigation, and filing that do not fit squarely within the regulatory requirements but are otherwise consistent with anti-money laundering regulatory and safety and soundness standards.

The final rule provides that requests for exemption must be submitted in writing and, when necessary, submitted to both the OCC and FinCEN.  Upon receiving exemption requests the OCC will consider “whether the exemption is consistent with the purposes of the [Bank Secrecy Act] and with safe and sound banking, and may consider other appropriate factors” and then respond to the request in writing.  The final rule also provides that the OCC has the authority to revoke exemptions at its sole discretion but must notify the national bank or Federal savings association, in writing, of its intention to do so.

In 2021 the Federal Reserve Board, FDIC, and NCUA also issued notices of proposed rulemaking that would make similar amendments to their respective SAR regulations.  WBK reported on those notices of proposed rulemaking here.  These rules have not been finalized.

This rule goes into effect on May 1, 2022.