[Federal Register Volume 79, Number 37 (Tuesday, February 25, 2014)]
[Rules and Regulations]
[Pages 10365-10377]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-04125]


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DEPARTMENT OF THE TREASURY

Financial Crimes Enforcement Network

31 CFR Parts 1010 and 1030

RIN 1506-AB14


Anti-Money Laundering Program and Suspicious Activity Report 
Filing Requirements for Housing Government Sponsored Enterprises

AGENCY: Financial Crimes Enforcement Network (``FinCEN''), Treasury.

ACTION: Final rule.

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SUMMARY: FinCEN, a bureau of the Department of the Treasury 
(``Treasury''), is issuing this Final Rule

[[Page 10366]]

defining certain housing government sponsored enterprises as financial 
institutions for the purpose of requiring them to establish anti-money 
laundering programs and report suspicious activities pursuant to the 
Bank Secrecy Act. The requirements to establish anti-money laundering 
programs and report suspicious activities are intended to help prevent 
fraud and other financial crimes.

DATES: Effective Date: This rule is effective April 28, 2014.
    Compliance Date: The compliance date for 31 CFR 1030.210 is August 
25, 2014.

FOR FURTHER INFORMATION CONTACT: FinCEN Resource Center at (800) 949-
2732.

SUPPLEMENTARY INFORMATION:

I. Background

A. Statutory and Regulatory Provisions

    FinCEN exercises regulatory functions primarily under the Currency 
and Foreign Transactions Reporting Act of 1970, as amended by the USA 
PATRIOT Act of 2001 and other legislation, which legislative framework 
is commonly referred to as the ``Bank Secrecy Act'' (``BSA'').\1\ The 
BSA authorizes the Secretary of the Treasury (``Secretary'') to require 
financial institutions to keep records and file reports that ``have a 
high degree of usefulness in criminal, tax, or regulatory 
investigations or proceedings, or in the conduct of intelligence or 
counterintelligence activities, including analysis, to protect against 
international terrorism.'' \2\ The Secretary has delegated to the 
Director of FinCEN the authority to implement, administer, and enforce 
compliance with the BSA and associated regulations.\3\ FinCEN is 
authorized to promulgate anti-money laundering (``AML'') and suspicious 
activity report (``SAR'') filing requirements for financial 
institutions subject to the BSA.\4\
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    \1\ The BSA is codified at 12 U.S.C. 1829b, 12 U.S.C. 1951-1959, 
18 U.S.C. 1956, 18 U.S.C. 1957, 18 U.S.C. 1960, and 31 U.S.C. 5311-
5314 and 5316-5332 and notes thereto, with implementing regulations 
at 31 CFR Chapter X. See 31 CFR 1010.100(e).
    \2\ 31 U.S.C. 5311.
    \3\ Treasury Order 180-01 (Sept. 26, 2002).
    \4\ 31 U.S.C. 5318(g)(1) and 5318(h)(2). 31 U.S.C. 5318(g) was 
added to the BSA by section 1517 of the Annunzio-Wylie Anti-Money 
Laundering Act, Title XV of the Housing and Community Development 
Act of 1992, Public Law 102-550; it was expanded by section 403 of 
the Money Laundering Suppression Act of 1994, Title IV of the Riegle 
Community Development and Regulatory Improvement Act of 1994, Public 
Law 103-325, to require designation of a single government recipient 
for reports of suspicious transactions.
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    The AML program provisions of the BSA require financial 
institutions to establish programs that include, at a minimum: (1) The 
development of internal policies, procedures, and controls; (2) the 
designation of a compliance officer; (3) an ongoing employee training 
program; and (4) an independent audit function to test programs. When 
prescribing minimum standards for AML programs, FinCEN must ``consider 
the extent to which the requirements imposed under [the AML program 
requirement] are commensurate with the size, location, and activities 
of the financial institutions to which such regulations apply.'' \5\ 
The SAR filing provisions of the BSA authorize FinCEN to require any 
financial institution, and any director, officer, employee, or agent of 
any financial institution to report any suspicious transaction relevant 
to a possible violation of law or regulation, and under other specified 
circumstances described below.
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    \5\ Public Law 107-56 sec. 352(c), 115 Stat. 322, codified at 31 
U.S.C. 5318 note.
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    FinCEN has promulgated AML program and SAR regulations for a number 
of financial institutions. These financial institutions include banks, 
casinos, money services businesses, brokers or dealers in securities, 
mutual funds, insurance companies, futures commission merchants, and 
introducing brokers in commodities and loan and finance companies.\6\ 
The BSA's definition of ``financial institution'' includes specified 
categories of businesses and professions, as well as ``any business or 
agency which engages in any activity which the Secretary of the 
Treasury determines, by regulation, to be an activity which is similar 
to, related to, or a substitute for any activity in which any business 
described in [31 U.S.C. 5312(a)(2)(A)-(X)] is authorized to engage.'' 
\7\ Thus, FinCEN may promulgate regulations for businesses and 
professions that are not listed in the statutory definition of 
financial institution.\8\
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    \6\ 31 CFR 1020.210, 1020.320, 1021.210, 1021.320, 1022.210, 
1022.320, 1023.210, 1023.320, 1024.210, 1024.320, 1025.210, 
1025.320, 1026.210, 1026.320, 1029.210 and 1029.320.
    \7\ 31 U.S.C. 5312(a)(2)(Y).
    \8\ 31 U.S.C. 5312(a)(2).
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    With this Final Rule, FinCEN establishes AML program and SAR 
requirements for the Federal National Mortgage Association (``Fannie 
Mae''), the Federal Home Loan Mortgage Corporation (``Freddie Mac''), 
and the Federal Home Loan Banks (``Banks'' or ``FHL Banks,'' 
collectively, the ``Housing GSEs''). FinCEN believes that the Final 
Rule will augment FinCEN's regulatory and strategic initiatives. The 
Housing GSEs are involved in providing financing to the residential 
mortgage market and thus are exposed to the risk of fraud. Although the 
business of the Banks differs in a number of respects from that of 
Fannie Mae and Freddie Mac, all of the Housing GSEs are involved in 
providing financing to the residential mortgage market and thus are 
vulnerable to fraud and other financial crimes. Also, both the primary 
and secondary residential mortgage markets are vulnerable to fraud and 
money laundering in terms of the proceeds of crime being invested in 
real property or securitized mortgages and related financial 
instruments. By purchasing mortgage loans, extending loans secured by 
mortgages and other real estate related collateral, and engaging in a 
variety of related financial activities, the Housing GSEs have access 
to, and are in a unique position to provide, information on suspected 
mortgage fraud and money laundering that has proven valuable to law 
enforcement and regulators in the investigation and prosecution of 
mortgage fraud and other financial crimes. While current fraud 
reporting by the Housing GSEs, discussed below, has value in combating 
fraud, the establishment of AML and SAR programs by the Housing GSEs 
will enable them to support broader regulatory and law enforcement 
efforts to combat mortgage fraud and related financial crimes 
consistent with the purposes of the BSA.

B. Establishment and Authority of the Federal Housing Finance Agency 
and the Housing GSEs

    The Federal Housing Finance Regulatory Reform Act of 2008 (the 
``Reform Act'') \9\ created the Federal Housing Finance Agency 
(``FHFA'') as an independent agency of the Federal government. FHFA was 
established on the date of enactment of the Reform Act, July 30, 2008, 
to be the Federal regulator of the Housing GSEs.\10\ FHFA has

[[Page 10367]]

regulatory authority over Fannie Mae, Freddie Mac, and the Banks 
(collectively referred to in FHFA regulations as the ``regulated 
entities''), and over the Office of Finance of the Federal Home Loan 
Bank System.\11\ FHFA is responsible for ensuring that the Housing 
GSEs: (1) Operate in a safe and sound manner, including being 
capitalized adequately and maintaining internal controls; (2) carry out 
their public policy missions; and (3) engage in activities that foster 
liquid, efficient, competitive, and resilient national housing finance 
markets. Where FHFA has not acted with superseding regulations, the 
Housing GSEs continue to operate under regulations promulgated by the 
Office of Federal Housing Enterprise Oversight (``OFHEO'') and the 
Federal Housing Finance Board (``FHFB'').\12\
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    \9\ Division A of the Housing and Economic Recovery Act of 2008 
(``HERA''), Public Law 110-289, 122 Stat. 2654 (2008). The Reform 
Act provided for the abolishment of the Office of Federal Housing 
Enterprise Oversight (``OFHEO'') and the Federal Housing Finance 
Board (``FHFB'') one year after the date of enactment. These 
agencies were the primary Federal regulators of Fannie Mae and 
Freddie Mac, and the Banks, respectively. The agencies, together 
with the Housing and Urban Development Government Sponsored 
Enterprise Mission Teams, were combined to establish FHFA.
    \10\ The authorities, powers, and responsibilities of FHFA are 
contained in the Federal Home Loan Bank Act, 12 U.S.C. 1421 et seq., 
as amended by Division A of HERA, and the Federal Housing 
Enterprises Financial Safety and Soundness Act of 1992 (``Safety and 
Soundness Act''), 12 U.S.C. 4501 et seq., as amended by Division A 
of HERA. See Notice of Establishment, 73 FR 52356 (Sept. 9, 2008). 
http://www.fhfa.gov/webfiles/160/FHFA_%20Notice_of_Establishment_-_73_FR_52356_(Sept--9%2c--2008).pdf.
    \11\ The Housing GSEs are defined as ``regulated entities'' in 
the Safety and Soundness Act, as amended, 12 U.S.C. 4501 et seq., 
and implementing regulations at 12 CFR part 1233. The statutory 
definition of ``regulated entity'' provides ``[t]he term `regulated 
entity' means--(A) the Federal National Mortgage Association and any 
affiliate thereof; (B) the Federal Home Loan Mortgage Corporation 
and any affiliate thereof; and (C) any Federal Home Loan Bank.'' 12 
U.S.C. 4502(20).
    \12\ On September 6, 2008, FHFA appointed itself conservator of 
Fannie Mae and Freddie Mac, pursuant to 12 U.S.C. 4617. http://www.fhfa.gov/webfiles/1858/NoticeregardingconservatorFNMA.pdf; 
http://www.fhfa.gov/webfiles/1857/NoticeregardingconservatorFHLMC.pdf.
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    Congress chartered Fannie Mae and Freddie Mac primarily to 
establish secondary market facilities for residential mortgages to 
promote access to mortgage credit throughout the nation. Specifically, 
Congress established Fannie Mae and Freddie Mac to provide stability in 
the secondary market for residential mortgages, respond appropriately 
to the private capital market, and provide ongoing assistance to the 
secondary market for residential mortgages, including activities 
relating to mortgages on housing for low-and moderate-income families 
involving a reasonable economic return that may provide less of a 
return than Fannie Mae's and Freddie Mac's other activities.\13\
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    \13\ 12 U.S.C. 1451, 1716.
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    The Banks were organized under the Federal Home Loan Bank Act 
(``The Bank Act'').\14\ The Banks are financial cooperatives; only 
members of a Bank may purchase the capital stock of a Bank, and only 
members, and certain eligible housing associates (such as State housing 
finance agencies), may obtain access to secured loans, known as 
advances, or other Bank products.\15\ Each Bank is managed by its own 
board of directors and serves the public interest by enhancing the 
availability of residential mortgage and community lending credit 
though its member institutions.\16\ Any eligible institution (generally 
a Federally-insured depository institution or State-regulated insurance 
company) may become a member of a Bank if it satisfies certain criteria 
and purchases a specified amount of the Bank's capital stock.\17\ The 
Bank Act also requires each Bank to establish an affordable housing 
program and contribute a specified portion of its previous year's net 
income to support that program.\18\
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    \14\ 12 U.S.C. 1423, 1432(a).
    \15\ 12 U.S.C. 1426(a)(4), 1430(a), 1430b.
    \16\ 12 U.S.C. 1427.
    \17\ 12 U.S.C. 1424; 12 CFR 1263.
    \18\ 12 U.S.C. 1430(j).
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    On January 27, 2010, FHFA issued fraud reporting regulations, 
codified at 12 CFR part 1233, ``Reporting of Fraudulent Financial 
Instruments,'' to implement the provisions of the Safety and Soundness 
Act with respect to the discovery and reporting of fraud, in 
furtherance of the supervisory responsibilities of FHFA.\19\ That 
regulation requires each Housing GSE to submit timely information on 
actual or possible fraud on all Housing GSE programs and products,\20\ 
including, but not limited to a timely report to FHFA upon discovery 
that it has purchased or sold a fraudulent loan or financial 
instrument, or if the Housing GSE suspects a possible fraud relating to 
the purchase or sale of any loan or financial instrument. As discussed 
infra, certain parts of FHFA reporting format are based upon FinCEN's 
SAR format. The regulation, and associated guidance subsequently 
published by FHFA,\21\ requires each Housing GSE to establish and 
maintain internal controls, policies, procedures, and operational 
training programs, and designate a fraud officer to oversee 
implementation and periodic monitoring (at least annually) of the fraud 
reporting program.
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    \19\ 75 FR 4255 (Jan. 27, 2010).
    \20\ 75 FR 4255, 4258-4259.
    \21\ RPG-2011-001 (March 2011), http://www.fhfa.gov/webfiles/20685/FHFAFraudReportingGuidance32011.pdf.
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C. Summary of the Proposed Regulations

    On November 8, 2011, FinCEN issued a Notice of Proposed Rulemaking 
(``NPRM'') to solicit comments on proposed AML and SAR regulations for 
the Housing GSEs.\22\ The proposed rules contained standards and 
requirements that are substantially identical to those in FinCEN's AML 
and SAR regulations for banks, mortgage companies, and other financial 
institutions that offer retail consumer banking services and mortgage 
loans.
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    \22\ 76 FR 69204.
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    This Final Rule is based on the NPRM and adopts, without 
significant change, all of the regulatory provisions proposed in the 
NPRM. The AML regulation promulgates the four minimum requirements 
noted earlier. The SAR regulation requires reporting of suspicious 
activity in accordance with the standards and procedures specified in 
the NPRM and contained in all of FinCEN's SAR regulations.\23\ The 
Final Rule does not require the Housing GSEs to comply with any other 
BSA reporting or recordkeeping regulations, such as currency 
transaction reporting.\24\
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    \23\ See, e.g., SAR regulations for non-bank residential 
mortgage lenders and originators at 31 CFR 1029.320. http://www.fincen.gov/redirect.html?url=http://www.gpo.gov/fdsys/pkg/FR-2012-02-14/pdf/2012-3074.pdf.
    \24\ 31 CFR 1010.310.
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    FinCEN believes that much of the effort necessary to meet these 
regulatory obligations, including information gathering, may be 
accomplished through business operations already undertaken as part of 
normal transaction negotiation, including due diligence and review of 
mortgage loans and related assets for purchase and securitization, and 
as collateral for advances and other investments, products, and 
services. As described in more detail below, the Housing GSEs have been 
filing SAR-like reports with FHFA for a number of years, and in other 
respects have supported the anti-fraud and anti-money laundering 
efforts of various law enforcement and regulatory agencies. FinCEN 
believes the Final Rule will enhance and strengthen the Housing GSEs' 
critical role in government and industry efforts to protect consumers, 
mortgage finance businesses, and the U.S. financial system from 
mortgage fraud, money laundering, and other financial crimes.

II. Notice of Proposed Rulemaking

    The comment period on the NPRM ended on January 9, 2012. FinCEN 
received five comments. Comments were submitted by a Federal government 
agency (two letters), a trade association, representatives of some of 
the Housing GSEs, and a Federal government anti-fraud task force.\25\ 
The

[[Page 10368]]

supporting comments emphasized the value of streamlining the current 
process under which SAR information from the Housing GSEs reaches 
FinCEN, and the substantial value of SARs predicted to cover a broader 
range of suspected financial crimes. FHFA has expressed strong support 
for FinCEN issuing AML and SAR regulations for the Housing GSEs. The 
public comments that expressed some opposition to the NPRM were based 
primarily on speculation that compliance costs and burdens would 
outweigh any potential benefits to law enforcement, and on the view 
that the current FHFA fraud reporting requirements are sufficient to 
support broad based government anti-fraud and anti-money laundering 
efforts.
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    \25\ In addition, FHFA's comment letter states that it 
``encompasses issues relating to'' Freddie Mac and Fannie Mae, as 
well as FHFA's perspective as the regulator of the Housing GSEs.
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A. Housing GSEs Defined as Financial Institutions

    As noted in the NPRM, the BSA does not expressly identify any of 
the Housing GSEs in its definition of ``financial institution.'' The 
BSA's definition of financial institution lists numerous types of 
businesses, including commercial banks and other depository 
institutions.\26\ The definition also includes a ``catch-all'' 
provision that authorizes the Secretary to include additional types of 
businesses if the Secretary determines, by regulation, that they engage 
in any activity ``similar to, related to, or a substitute for'' any 
activity of any of the listed businesses.\27\
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    \26\ 31 U.S.C. 5312(a)(2) and (c)(1). The BSA definition 
includes financial institutions subject to the regulations of a 
Federal functional regulator, such as banks, savings associations, 
credit unions, securities broker-dealers, and futures commission 
merchants. The BSA definition also includes dealers in precious 
metals, stones, or jewels; money services businesses (such as money 
transmitters and currency exchanges); pawnbrokers; loan and finance 
companies; private bankers; insurance companies; travel agencies; 
telegraph companies; sellers of vehicles, including automobiles, 
airplanes, and boats; persons engaged in real estate closings and 
settlements; investment bankers; investment companies; and commodity 
pool operators and commodity trading advisors that are registered or 
required to register under the Commodity Exchange Act (7 U.S.C. 1, 
et seq.).
    \27\ 31 U.S.C. 5312(a)(2)(Y).
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    The Housing GSEs work closely with other BSA-defined financial 
institutions; in fact, the majority of the Housing GSEs' counterparties 
and members are commercial banks, thrifts, credit unions, and insurance 
companies. Many of the products and services offered by the Housing 
GSEs can be viewed as substitutes for or related to products and 
services offered by commercial banks and nonbank financial institutions 
included in the BSA's definition of financial institution.
    The main role of the Housing GSEs is to support the primary 
mortgage market and affordable housing through the purchase, guarantee, 
and securitization of mortgage loans and the extension of loans secured 
primarily by mortgage loans and real estate related assets. The Banks 
also provide grants or subsidies for affordable housing and community 
investment. Typically, a significant portion of these mortgage loans 
are made by commercial banks, credit unions, and savings and loan 
associations, which are already financial institutions under the BSA 
and subject to FinCEN's regulations.\28\ Some of the Banks also have 
acquired member asset programs whereby they acquire fixed-rate, single-
family mortgage loans from participating member institutions, which 
also are generally commercial banks or other depository institutions 
already included within the BSA's definition of financial institutions. 
Thus, FinCEN believes that the Housing GSEs engage in activities that 
are ``similar to, related to, or a substitute for'' financial services 
that are provided by other BSA-defined financial institutions. For this 
reason, FinCEN hereby exercises its authority under 31 U.S.C. 
5312(a)(2)(Y) to define the Housing GSEs as financial institutions.
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    \28\ 31 U.S.C. 5312(a)(2).
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    One commenter noted that Congress enacted Section 1115 of the 
Housing and Economic Recovery Act of 2008 (``HERA''),\29\ which 
required FHFA to promulgate the fraud reporting regulations at 12 CFR 
1233, without adding the Housing GSEs to the list of financial 
institutions in the BSA, or otherwise requiring the Housing GSEs to 
comply with FinCEN or FHFA regulations that would require AML and SAR 
programs. The commenter urged FinCEN to ``presume that Congress acted 
intentionally where it specifically adds language to one statute over 
another.'' The commenter further stated that ``[I]f Congress had 
intended for the [Housing] GSEs to be considered financial institutions 
under the BSA, then the statute would have been amended to specifically 
include the [Housing] GSEs. Rather, Congress enacted separate anti-
fraud requirements in HERA that are unique to the FHLBank's wholesale 
business structure.''
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    \29\ See notes 9 and 10.
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    FinCEN is not persuaded by the commenter's analysis regarding 
Congress's intent, or by the commenter's interpretation of the BSA. 
Rather, FinCEN believes that Congress enacted the ``catch-all'' 
provision at 31 U.S.C. 5312(b)(2)(Y) in order to give the Secretary and 
his delegate, FinCEN, the discretion, in future regulatory actions, to 
add businesses and professions to the statutory list of financial 
institutions, and thereby make them subject to certain provisions of 
the BSA.\30\ FinCEN believes that neither Congress, nor any other 
legislative or regulatory body, would be able to list all of the types 
of businesses that may be vulnerable to money laundering for all time. 
As businesses evolve, so do the criminal schemes designed to exploit 
them for illegal financial gain. The ``catch-all'' provision implicitly 
recognizes this fact, and gives FinCEN discretion to determine the 
types of businesses that should become subject to regulations 
implementing the BSA.
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    \30\ See note 7.
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    The scope of the Final Rule is limited. It defines the Housing GSEs 
as ``financial institutions'' under 31 U.S.C. 5312(a)(2)(Y) for the 
purposes of requiring them to establish AML programs and report 
suspicious activities, as well as allow them to participate in special 
information sharing procedures to deter money laundering and terrorist 
activity. The term ``Housing government sponsored enterprise'' is added 
as a new defined term at 31 CFR 1010.100(mmm) for these purposes. 
Notably, the Final Rule does not amend the general definition of 
``financial institution'' under FinCEN's regulations at 31 CFR 
1010.100(t) because adding Housing GSEs to the general definition would 
trigger other recordkeeping and reporting requirements that FinCEN does 
not consider appropriate for the Housing GSEs at this time.

B. AML Program and SAR Filing Requirements

    Under this Final Rule, the Housing GSEs are required to establish 
and maintain AML programs, and to file SARs directly with FinCEN, as of 
the regulatory compliance date. As emphasized in the NPRM, FinCEN does 
not expect the transition to compliance with the Final Rule to be 
unreasonably difficult or costly, primarily because the Housing GSEs 
already are required to have policies, management oversight, personnel 
training, and internal compliance review and various procedures and 
systems in place to comply with FHFA's current fraud reporting 
regulation and guidance.\31\ These programmatic features are 
substantively very similar to those required in all AML regulations 
issued by FinCEN. Moreover, pursuant to the terms of a Memorandum of

[[Page 10369]]

Understanding (``MOU'') between FinCEN and FHFA, the Housing GSEs have 
been filing separate reports with FHFA regarding suspicions of fraud, 
using technical specifications provided by FinCEN, in accordance with 
FHFA's guidance. FHFA, in turn, has provided this information to FinCEN 
in the form of SARs (albeit regarding a narrower range of suspicious 
activity than is covered in FinCEN's typical SAR regulations).\32\ FHFA 
agrees that this indirect reporting structure should be restructured to 
better support the needs of law enforcement and extend the benefit of 
the BSA's ``safe harbor'' to the Housing GSEs. FHFA also agrees that a 
direct reporting structure from the Housing GSEs to FinCEN would be 
more streamlined than the current practice because direct reporting 
would, in part, eliminate the burden created by the significant effort 
FHFA devotes to providing information received from the Housing GSEs 
and filing to FinCEN as SARs.
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    \31\ See notes 19, 20, and 21.
    \32\ The first MOU governing this separate fraud reporting 
arrangement was executed in May 2006 between FinCEN and FHFA's 
predecessor agency, OFHEO, which established the requirements 
applicable to Fannie Mae and Freddie Mac. A superseding MOU, with 
most of the same provisions, was executed by FinCEN and FHFA in July 
2010, which established the requirements for Fannie Mae and Freddie 
Mac, as well as the 12 Federal Home Loan Banks. The Housing GSEs are 
required to use a data template that ``complies with the technical 
specifications set forth by FinCEN for the [SAR] report for 
depository institutions.'' See paragraph II.B.3. of FHFA's guidance 
on fraud reporting, referenced in note 21.
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    The indirect reporting structure is inadequate to support the needs 
of law enforcement because reports are not available to law enforcement 
with the same speed they would be if they were filed directly. 
Additionally, law enforcement does not have the same ease of access to 
the records supporting any report filed by the Housing GSEs with FHFA 
as it would if the reports were filed directly with FinCEN under the 
obligations of the BSA. Direct filing by the Housing GSEs will result 
in a wider range of information made available to law enforcement more 
promptly. Finally, the indirect reporting structure does not allow the 
Housing GSEs to avail themselves of the BSA's ``safe harbor.'' The 
current reporting regime required by FHFA has its own ``safe harbor,'' 
but does not cover the same range of reporting as the BSA safe harbor, 
nor does it offer the same broad protection.
    The comments on the NPRM primarily focused on the potential 
benefits, costs, and burdens of implementing the AML program and SAR 
filing requirements proposed in the NPRM. Three of the comments express 
the view that the Housing GSEs have limited access to useful SAR 
information about specific retail mortgage finance transactions. Two of 
these comments also stated that: (1) The current FHFA fraud reporting 
requirements are sufficient to support law enforcement, and any FinCEN 
SAR requirement would yield little, if any, additional useful 
information not already obtained by FHFA; (2) any new SAR requirement 
would result in duplicative SAR filings on the same suspicious 
activity, such as one report from a retail bank or non-bank mortgage 
company, and one report from the Housing GSE; and (3) any new AML and 
SAR regulations would require the Housing GSEs, particularly the Banks, 
to implement new detection, monitoring, and reporting practices, 
controls and systems, and possibly modify existing business models. In 
their view, the potential costs and burdens associated with any new AML 
or SAR regulations would not result in any corresponding substantial or 
justifiable benefit to law enforcement and regulators.
    The three previously referenced comments cautioned that the Housing 
GSEs have limited interactions with parties to a primary market 
mortgage loan transaction (i.e., the lender, the borrower and various 
persons typically engaged in closing a primary purchase, refinance or 
home equity loan transaction) and, therefore, the Housing GSEs have 
limited access to information on the borrower's qualifications, the 
terms and circumstances regarding the loan, and other transaction-
related information typically included in a SAR. Two of these comments 
also express the view that, due to the Banks' limited access to 
transactional information, extending AML and SAR requirements to the 
Housing GSEs, particularly the Banks, will not provide law enforcement 
with access to information on fraud related or non-fraud related money 
laundering or other financial crimes that FHFA does not already receive 
under the current FHFA reporting regime. These two comments further 
stated that the Banks, in particular, would likely need to restructure 
their current business practices, systems, and models to ``peer 
through'' their wholesale transactions and obtain information usually 
gathered at the origination stage to a greater extent than their 
current business practices and systems accomplish. The comments 
therefore urged that any new FinCEN AML or SAR requirements should not 
require the acquisition of transaction information that is not already 
obtained by the Housing GSEs in the ordinary course of business under 
current practices. One comment specifically requested that FinCEN 
confirm that any new AML and SAR rules will not require the Banks to 
establish new IT monitoring or data-mining systems of the kind adopted 
by higher risk institutions engaged in retail banking.
    The comments further stated that the current FHFA fraud reporting 
regulations and guidance are sufficient to provide law enforcement and 
regulators with information necessary to investigate and prosecute 
mortgage fraud and fraud related money laundering and other financial 
crimes typically associated with residential mortgage transactions, and 
that FinCEN's AML and SAR program requirements therefore are 
unnecessary.
    One comment stated that the rules proposed in the NPRM would 
require the Banks to duplicate the efforts of ``99 percent'' of the 
Banks' customer base (i.e., retail banks and other insured depository 
institutions, all of whom already have a SAR filing obligation under 
applicable FinCEN and Federal banking regulations), thus resulting in 
overlapping or duplicative SAR reports on the same suspicious activity. 
One of the comments that generally supported the NPRM nonetheless 
cautioned that the proposed rules could result in ``unintended 
consequences.'' The comment noted, as an example of an unintended 
consequence, the likelihood of duplicative, overlapping requirements 
and SAR filings. One comment concluded simply that the potential 
additional benefits to law enforcement ``appear to be minimal.''
    The comments noted that the Banks already have expended significant 
time and resources on establishing and maintaining policies, 
procedures, systems and employee training to comply with FHFA's fraud 
reporting requirements. The comments concluded that FHFA requirements, 
and the programs established to comply with them, should be given time 
to ``mature.'' The comments expressed the view that any new rules 
should be issued only if it becomes evident that the current FHFA fraud 
reporting regime is determined to be inadequate. FinCEN believes the 
addition of the Housing GSEs within FinCEN's framework for SAR 
reporting will be the most efficient overall approach.
    In the NPRM, FinCEN requested comment on whether it would be 
appropriate to include in a Final Rule any provisions that account for 
the differences in the business, operation, and mission of the Banks 
and Fannie Mae and Freddie Mac. Three comments

[[Page 10370]]

noted that the practices followed by Freddie Mac and Fannie Mae in 
connection with due diligence on loan pools, and related consideration 
of credit, interest rate, and operational risks, differ from those 
followed and considered by the Banks in connection with examination of 
loans and other assets as collateral for advances. Two comments stated 
that if FinCEN goes forward with final rules, FinCEN should take into 
account the differences in business models and practices of the Banks, 
on the one hand, and those of Fannie Mae and Freddie Mac, on the other. 
One comment urged that the requirements and standards in any final 
rules should be abbreviated and streamlined for the Banks, again 
arguing that the Banks generally do not obtain detailed borrower and 
transaction related information from their retail banking members in 
the ordinary course of business. Three comments, including one from 
FHFA, also urged that any final rules should be ``phased-in'' to give 
the Housing GSEs sufficient time to make changes to policies, 
procedures, systems, and business practices that would be deemed 
appropriate to comply with the Final Rule, and FinCEN's new uniform SAR 
requirements mandated on July 1, 2012.\33\
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    \33\ 77 FR 12367 (Feb. 29, 2012).
---------------------------------------------------------------------------

    The comments that supported the NPRM expressed opinions and 
conclusions largely contrary to those expressed in the comments 
summarized above. The supporting comments highlight the following 
benefits, among others, of the rules proposed in the NPRM: (1) The new 
SAR rules, by requiring the Housing GSEs to file SARs directly with 
FinCEN, will enhance FinCEN's database, reduce burdens on government 
resources, and strengthen the mortgage fraud prevention programs and 
initiatives of the Housing GSEs and FinCEN; (2) the rules will give law 
enforcement and regulators quicker access to SAR information that is 
critical to investigations, and keep them better informed about 
evolving criminal schemes; (3) the rules will enhance coordination on 
analysis and investigations by FinCEN, FHFA, FHFA-OIG, and other law 
enforcement authorities on the Federal, State, and local levels that 
have access to FinCEN's BSA database; and (4) the AML rules will 
bolster HERA's reporting requirement, which likely will result in 
better information for investigations and enforcement actions. FinCEN 
finds these views persuasive and believes the Final Rules will support 
Administration and government efforts to combat mortgage fraud and 
other financial crimes.
    FinCEN believes that both the AML program and SAR filing 
requirements are necessary and appropriate for the Housing GSEs and 
other businesses involved in mortgage finance, in order to give law 
enforcement and regulatory agencies valuable, timely information on 
specific instances of suspected mortgage fraud and mortgage finance 
related money laundering, as well as provide insight into emerging 
patterns of regional and national criminal activity. The information 
from SARs and other BSA-related information assists law enforcement and 
regulators with the development of their strategic goals and policies, 
as well as with the deployment of valuable resources to high crime 
areas.
    FHFA's fraud reporting program is important in that it allows FHFA 
to both monitor the Housing GSEs' success in identifying fraud and 
mitigate attendant risks, and assess the impact that involvement in 
such transactions may have on the Housing GSEs' operational risks and 
overall safety and soundness. FHFA's reporting system, however, was not 
designed to support the multi-jurisdictional and inter-governmental 
investigations, prosecutions, and trend analyses that rely on SAR data 
and other BSA-related information in FinCEN's databases. Only FinCEN, 
as the nation's financial intelligence unit and administrator of the 
BSA, has the authority and resources to collect, analyze, and 
disseminate this vast amount of information to its Federal, State, and 
local law enforcement and regulatory partners securely and 
confidentially. The BSA and FinCEN's implementing regulations also 
permit sharing of primary and secondary mortgage market transactional 
information, in a secure and confidential manner, among financial 
institutions that enroll in FinCEN's 314(b) program.\34\ These 
functions cannot be accomplished by FHFA, or any other government 
agency, under current Federal and State laws and regulations. The 
faster that information from the Housing GSEs makes its way into the 
BSA database, the sooner FinCEN and other agencies will be able to 
access that information to support investigations and enforcement 
actions related to money laundering, fraud, and other financial crimes.
---------------------------------------------------------------------------

    \34\ See discussion in section III.E. regarding FinCEN's special 
information sharing regulations applicable to the Housing GSEs and 
other financial institutions.
---------------------------------------------------------------------------

    FinCEN expects there will be transactions involving the Housing 
GSEs with respect to which two or more SARs will be submitted to FinCEN 
concerning the same transaction or activity, and in this respect, the 
SARs arguably may be viewed as ``duplicative'' or ``overlapping.'' For 
example, one SAR may be submitted by the retail-level originator or 
lender, and one ``overlapping'' SAR by a Housing GSE regarding the same 
transaction or activity. Based on the SARs filed to date under the MOU 
between FinCEN and FHFA, FinCEN believes a number of these 
``overlapping'' SARs likely will concern a specific loan or loan pool 
repurchased by the originating institution upon the request of the 
Housing GSE, pursuant to the terms of the Housing GSE's contract with 
the originating institution or servicer. For example, a contract may 
permit a Housing GSE to demand repurchase upon discovery by the Housing 
GSE, a loan servicer, the originating institution, or a combination of 
these or other financial professionals, of loan related fraud or 
delinquency, including payment default, borrower misrepresentation, or 
some irregularity or discrepancy in the appraisal or loan 
documentation. The SAR forms, however, also may contain non-overlapping 
information and--in any event--will reflect the unique perspective and 
analyses of the two, or more, SAR filers. The availability of different 
data presented from different business perspectives by organizations 
with different, but complementary, roles in mortgage finance may be 
useful for law enforcement to gain a more comprehensive understanding 
of the transaction and its circumstances. FinCEN views this consequence 
of the existence of parallel reporting requirements for banks, non-bank 
residential mortgage lenders and originators, and Housing GSEs as a 
significant potential advantage to law enforcement and regulators that 
justifies the relatively minor additional costs and burdens to be borne 
by the Housing GSEs. This view is further confirmed by FinCEN's broad 
experience in requiring SAR reporting from a range of financial 
institutions, a small percent of which may contain reporting of 
partially overlapping information, but which together add significant 
value.
    FinCEN's issuance of final AML and SAR rules for non-bank 
residential mortgage lenders and originators emphasized the critical 
importance of institutions establishing an AML program and filing SARs 
in order to prevent and identify mortgage fraud and other financial 
crimes.\35\ FinCEN

[[Page 10371]]

expressed its view that the establishment of a complete AML program is 
essential for institutions to have an effective SAR filing program. 
Each of the ``four pillars'' of an AML program is critical to holding 
up the overall structure of the program. It would be difficult to 
expect useful SAR reporting without the pillars of an AML program 
firmly in place. FinCEN's regulations are structured to ensure that 
financial institutions are knowledgeable of risks and vigilant against 
fraud and other crimes. All of FinCEN's AML regulations require covered 
institutions to implement risk-based programs that take into account 
the unique risks associated with that particular institution's products 
and services, as well as the institution's size, market, and other 
issues. Thus, each Housing GSE's AML program would necessarily be 
different than those of other Housing GSEs with different business 
models and practices, as well as different product, geographic, and 
other risks. As a result, FinCEN believes that the AML regulations in 
this Final Rule inherently recognize the differences in the business 
models and practices of the Banks, Fannie Mae, and Freddie Mac, and 
that separate regulatory requirements for the Banks, on the one hand, 
and Fannie Mae and Freddie Mac, on the other, are unnecessary.\36\ 
Under a risk-based approach to implementation of the Final Rule, FinCEN 
expects prevention of money laundering and other financial crimes, such 
as mortgage fraud, to be key goals underlying the various policies and 
procedures in an effective AML program for each Housing GSE. Therefore, 
the AML regulation proposed in the NPRM is adopted in this Final Rule 
without significant changes.
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    \35\ 31 CFR part 1029; 77 FR 8148 (Feb. 14, 2012).
    \36\ FHFA is required, when issuing any regulation or guidance, 
to consider differences between the Banks and the Enterprises 
(Fannie Mae and Freddie Mac). FHFA also acknowledged in its 
regulatory policy guidance (RPG-2011-001) that it expects fraud 
detection and reporting controls, ``should be more expansive when a 
financial instrument is owned or guaranteed versus when a financial 
instrument serves as collateral.'' III.A., p.9.
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    FinCEN believes it is important to highlight the value of SARs that 
will be filed by the Housing GSEs. As one comment noted, law 
enforcement agencies have advised FinCEN and FHFA that SARs from the 
Housing GSEs under the present MOU procedures are very useful in the 
investigation and prosecution of financial crimes. Filing SARs directly 
with FinCEN will increase the speed and ease with which law enforcement 
and regulators can access and utilize the information contained in 
those valuable SARs. Finally, FinCEN's SAR database has been a ``one-
stop'' integrated system for law enforcement and regulator access to 
valuable information on suspected financial crimes. It is appropriate, 
efficient, and consistent with FinCEN's statutory mandate to 
consolidate all suspicious activity reports from financial institutions 
in the database where they can be of the most value.\37\
---------------------------------------------------------------------------

    \37\ 31 U.S.C. 310.
---------------------------------------------------------------------------

    As FinCEN explained in the NPRM, the new SAR regulations will 
require the reporting of a potentially broader range of financial 
crimes than under FHFA's fraud reporting regulations. This, along with 
the ability to share information among the Housing GSEs and with other 
financial institutions, may well result in the Housing GSEs filing more 
SARs than fraud reports filed pursuant to FHFA's regulations. FinCEN 
also acknowledges that limited access to transactional information of a 
residential mortgage loan may limit the ability of a Housing GSE to 
include in a SAR all of the information typically found in a SAR filed 
by a retail bank or mortgage company. FinCEN expects that some of the 
Housing GSEs may need to establish new, or modify existing, policies, 
procedures, systems, organizational controls, or employee training 
arrangements. Nonetheless, FinCEN believes that these changes, and any 
related investments, will not need to be as extensive as some of the 
comments suggest, and that a substantial part of the new suspicious 
activity reporting and AML program requirements of this Final Rule may 
be integrated into existing procedures, controls, systems, and training 
programs with relatively minor costs. FinCEN emphasizes that each 
Housing GSE already has established procedures, systems, and controls 
to submit reports to FHFA when a Housing GSE discovers it has purchased 
or sold a fraudulent loan or financial instrument (e.g., a mortgage-
backed security), or suspects a possible fraud relating to the purchase 
or sale of any loan or financial instrument. Under FHFA's guidance and 
the MOU, FHFA then transmits some of these reports to FinCEN using a 
SAR.\38\
---------------------------------------------------------------------------

    \38\ See note 21 regarding FHFA Fraud Reporting Guidance, 
section II.B.3.
---------------------------------------------------------------------------

    FinCEN believes that new investment in elaborate, expensive systems 
will not be necessary for the Banks, Freddie Mac, or Fannie Mae to 
comply with the Final Rule. For those Banks that anticipate the need to 
submit a relatively low number of SARs, they may establish procedures 
to submit individual SARs via FinCEN's established Web-based electronic 
system, which does not require acquisition of any new systems or 
modifications to systems used to comply with FHFA filing requirements. 
FinCEN and other agencies have issued substantial guidance on the 
development of risk-based AML and SAR reporting programs.\39\ FinCEN 
believes the Housing GSEs may build on their existing risk management 
procedures and prudential business practices to ensure compliance with 
this Final Rule with minimal cost. In sum, FinCEN believes that the 
Final Rule does not impose significant costs on the Housing GSEs.
---------------------------------------------------------------------------

    \39\ See, e.g., Guidance--Preparing a Complete and Sufficient 
Suspicious Activity Report Narrative (including related PowerPoint 
Presentation--Keys to Writing a Complete and Sufficient SAR 
Narrative), Nov. 2003, http://www.fincen.gov/statutes_regs/guidance/html/narrativeguidance_webintro.html; Guidance--
Suggestions for Addressing Common Errors Noted in Suspicious 
Activity Reporting, Oct. 10, 2007, http://www.fincen.gov/statutes_regs/guidance/html/SAR_Common_Errors_Web_Posting.html; 
Guidance--Suspicious Activity Report Supporting Documentation, June 
13, 2007 (FIN-2007-G003), http://www.fincen.gov/statutes_regs/guidance/html/Supporting_Documentation_Guidance.html The SAR 
Activity Review--Trends, Tips and Issues (Issue 16), Oct. 2009, 
Section 4, Law Enforcement Suggestions When Preparing Suspicious 
Activity Reports, p. 45., http://www.fincen.gov/statutes_regs/guidance/html/narrativeguidance_webintro.html. See also NPRM, note 
45.
---------------------------------------------------------------------------

    FinCEN also wishes to emphasize that, by the designation of the 
Housing GSEs as ``financial institutions'' under the BSA, the Housing 
GSEs, as well as their directors, officers, employees, and agents, are 
covered by the BSA's liability safe harbor for financial institutions 
that file SARs.\40\ This safe harbor is intended to encourage financial 
institutions to report suspicious activities, even if, as here, the SAR 
regulation will likely require reporting of a wider range of suspected 
fraud, money laundering, and financial crimes related to the products 
and services offered by the Housing GSEs than those entities may 
currently be accustomed to report.
---------------------------------------------------------------------------

    \40\ 31 U.S.C. 5318(g)(3).
---------------------------------------------------------------------------

III. Section-by-Section Analysis

A. Definition of Housing Government Sponsored Enterprise

    Section 1010.100(mmm) defines the key terms used in the Final Rule. 
The definitions reflect FinCEN's determination that AML program and SAR 
requirements should be applied to the Housing GSEs. The definition of 
``Housing government sponsored enterprise'' includes: (1) The Federal 
National Mortgage Association; (2) the Federal Home Loan Mortgage 
Corporation; and (3) each Federal Home

[[Page 10372]]

Loan Bank. The definition does not include any entity-affiliated party 
\41\ of Fannie Mae, Freddie Mac, or any Bank, including the Office of 
Finance of the Federal Home Loan Bank System.
---------------------------------------------------------------------------

    \41\ 12 U.S.C. 4502(11).
---------------------------------------------------------------------------

B. Compliance and Enforcement

    Section 1010.810(b)(10) delegates authority to examine the Housing 
GSEs for compliance with the requirements of this Final Rule to FHFA. 
FHFA is the Federal regulator for the Housing GSEs and enforces its own 
statutes and regulations regarding safety and soundness. FHFA is 
FinCEN's delegate for examination for compliance with FinCEN's 
regulations. FinCEN will work with FHFA to coordinate and direct such 
delegated compliance examination activities. FinCEN retains enforcement 
authority under the BSA, including for the imposition of civil 
penalties for violations of these regulations.

C. Anti-Money Laundering Program

    Section 1030.210(a) requires each Housing GSE to develop and 
implement an AML program reasonably designed to prevent the Housing GSE 
from being used to facilitate money laundering or the financing of 
terrorist activities, and other financial crimes, including mortgage 
fraud. The program must be in writing and must be approved by senior 
management. A Housing GSE's written program also must be made available 
to FinCEN upon request.
    Section 1030.210(b) sets forth the minimum requirements of a 
Housing GSE's AML program. Beyond these minimum requirements, however, 
the Final Rule is intended to give Housing GSEs the flexibility to 
design their programs to mitigate their own specific risks. Section 
1030.210(b)(1) requires the AML program to incorporate policies, 
procedures, and internal controls based upon the Housing GSE's 
assessment of the risks of money laundering, terrorism finance, and 
other financial crimes associated with its products, counterparties, 
distribution channels, and geographic locations. A Housing GSE's 
assessment of counterparty-related information is a key component to an 
effective AML program. Thus, a Housing GSE's AML program must ensure 
that the Housing GSE obtains the information necessary to make its AML 
program effective. Such information may, but is not required to, 
include relevant information on individual borrowers and the financial 
institutions that are the Housing GSE's counterparties or members. The 
specific means of obtaining such information is left to the discretion 
of the Housing GSE.
    In the NPRM, FinCEN stated that it anticipated that the Housing 
GSEs may need to amend existing agreements to ensure that they receive 
necessary customer information. Upon consideration of the comments on 
the NPRM, FinCEN highlights that amendment of agreements may not be 
necessary, and FinCEN emphasizes that the Final Rule does not require 
such amendments. However, the determination whether agreements may need 
amendment is a matter that the Housing GSEs' management should consider 
in assessing risks associated with products and services subject to the 
AML and SAR requirements. The AML program requirement does not obligate 
the Housing GSEs to obtain information that they do not already receive 
in the ordinary course of business under current practices, 
particularly with regard to information on individual borrowers the 
Housing GSEs do not receive in the ordinary course of business. For 
purposes of making the required risk assessment, a Housing GSE must 
consider all relevant information that is currently available to them, 
including whether the retail financial institutions that are its 
customers are subject to AML program requirements under the BSA.
    Policies, procedures, and internal controls also must be reasonably 
designed to ensure compliance with BSA requirements. Housing GSEs may 
conduct some of their operations through third parties. Some elements 
of the compliance program may best be performed by personnel of such 
third parties, in which case it is permissible for a Housing GSE to 
delegate contractually the implementation and operation of those 
aspects of its AML program to such an entity, and to rely on the 
compliance program of such third parties if the third parties are 
subject to an independent AML program requirement under the BSA. Any 
Housing GSE that delegates responsibility for aspects of its AML 
program to a third party, however, remains fully responsible for the 
effectiveness of the program, as well as ensuring that examiners are 
able to obtain information and records relating to the AML program.
    Section 1030.210(b)(2) requires that a Housing GSE designate a 
compliance officer to be responsible for administering the AML program. 
The person should be competent and knowledgeable regarding BSA 
requirements and money laundering and fraud issues and risks, and 
should be empowered with full responsibility and authority to develop 
and enforce appropriate policies and procedures. The role of the 
compliance officer is to ensure that (1) the program is implemented 
effectively; (2) the program is updated as necessary; and (3) 
appropriate persons are trained and educated in accordance with section 
1030.210(b)(3).
    Section 1030.210(b)(3) requires that a Housing GSE provide for 
education and training of appropriate persons. Employee training is an 
integral part of any AML program. To carry out their responsibilities 
effectively, employees of a Housing GSE (and of any third party not 
already receiving training as part of another AML program requirement) 
with responsibility under the program must be trained in the 
requirements of the Final Rule and money laundering and fraud risks 
generally so that they can identify red flags associated with existing 
or potential customers and transactions. Such training may be conducted 
by outside or in-house seminars, and may include computer-based 
training. The nature, scope, and frequency of the education and 
training program of the Housing GSE will depend upon the employee 
functions performed. However, those with obligations under the AML 
program must be sufficiently trained to carry out their 
responsibilities effectively. Moreover, these employees should receive 
periodic updates and refreshers regarding the AML program.
    Section 1030.210(b)(4) requires that a Housing GSE provide for 
independent testing of the program on a periodic basis to ensure that 
it complies with the requirements of the Final Rule and that the 
program functions as designed. An outside consultant or accountant need 
not perform the testing and review. The review may be conducted by an 
officer, employee or group of employees, so long as the reviewer is not 
the designated compliance officer and does not report directly to the 
compliance officer. The frequency of the independent testing will 
depend upon the Housing GSE's assessment of risks posed by its 
operations. Any recommendations resulting from such testing should be 
reviewed by senior management. A Housing GSE may also rely on the 
testing performed by third parties that are subject to an independent 
AML program requirement. Section 1030.210(c) states that compliance 
with the AML program requirements will be determined by FinCEN or its 
delegate.

D. Reports of Suspicious Transactions

    Section 1030.320(a) contains the rules setting forth the obligation 
of Housing

[[Page 10373]]

GSEs to report suspicious transactions that are conducted or attempted 
by, at, or through a Housing GSE and involve, independently or in the 
aggregate, at least $5,000 in funds or other assets. It is important to 
recognize that transactions are reportable under this Final Rule and 31 
U.S.C. 5318(g) regardless of whether they involve currency. The $5,000 
minimum amount is consistent with existing SAR filing requirements for 
other financial institutions.
    Section 1030.320(a)(1) contains the general statement of the 
obligation to file reports of suspicious transactions. The obligation 
extends to transactions conducted or attempted by, at, or through a 
Housing GSE. The Final Rule also contains a provision in section 
1030.320(a)(1) designed to encourage the reporting of transactions that 
appear relevant to violations of law or regulation, even in cases in 
which the Final Rule does not explicitly so require, such as in the 
case of a transaction falling below the $5,000 threshold.
    Section 1030.320(a)(2) specifically describes the four categories 
of transactions that require reporting. A Housing GSE is required to 
report a transaction if it knows, suspects, or has reason to suspect 
that the transaction (or a pattern of transactions of which the 
transaction is a part): (i) Involves funds derived from illegal 
activity or is intended or conducted to hide or disguise funds or 
assets derived from illegal activity; (ii) is designed, whether through 
structuring or other means, to evade the requirements of the BSA; (iii) 
has no business or apparent lawful purpose, and the Housing GSE knows 
of no reasonable explanation for the transaction after examining the 
available facts; or (iv) involves the use of the Housing GSE to 
facilitate criminal activity.\42\
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    \42\ The fourth reporting category has been added to the 
suspicious activity reporting rules promulgated since the passage of 
the USA PATRIOT Act to make it clear that the requirement to report 
suspicious activity encompasses the reporting of transactions 
involving fraud and those in which legally derived funds are used 
for criminal activity, such as the financing of terrorism.
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    A determination as to whether a report is required must be based on 
all the facts, circumstances and information to which the Housing GSE 
has access, in the ordinary course of its business, relating to the 
transaction and customer of the Housing GSE in question. Different fact 
patterns and circumstances will require different judgments. Some 
examples of red flags associated with existing or potential customers 
are referenced in previous FinCEN reports and guidance on mortgage 
fraud and SAR filing. However, the means of commerce and the techniques 
of money laundering are continually evolving, and there is no way to 
provide an exhaustive list of suspicious transactions or red flags. 
FinCEN will continue to pursue a regulatory approach that involves a 
combination of guidance, training programs, and government-industry 
information exchange so that implementation of any new AML program and 
SAR reporting regulations can be accomplished in the most flexible and 
cost efficient way possible, while protecting the primary and secondary 
mortgage markets and the financial system as a whole from fraud, money 
laundering, and other financial crimes.
    Section 1030.320(a)(3) provides that the obligation to identify and 
to report a suspicious transaction rests with the Housing GSE involved 
in the transaction. However, where more than one Housing GSE, or 
another financial institution with a separate suspicious activity 
reporting obligation, is involved in the same transaction (or related 
transactions), only one report is required to be filed, provided it 
contains all relevant information and each institution maintains a copy 
of the report and any supporting documentation related to the SAR. 
There is, however, no obligation for the Housing GSEs to notify each 
other or work together in such circumstances. Each Housing GSE must 
evaluate customer activity and relationships for fraud, money 
laundering, and other financial crime risks, and design a suspicious 
transaction monitoring and reporting program that is appropriate for 
the particular Housing GSE in light of such risks.
    Section 1030.320(b) sets forth the filing procedures to be followed 
by Housing GSEs making reports of suspicious transactions. Within 30 
days after a Housing GSE becomes aware of a suspicious transaction (or 
within 60 days if no suspect has been identified), it must report the 
transaction by completing a SAR and filing it with FinCEN. Supporting 
documentation relating to each SAR is to be collected and maintained 
separately by the Housing GSE and made available upon request by 
FinCEN, FHFA or any appropriate Federal, State, or local law 
enforcement agency, or any Federal regulatory authority that examines 
the Housing GSE for compliance with the BSA. FinCEN's SAR regulations 
provide that the documentation supporting a SAR that is maintained by 
the filer, is deemed to be filed with the SAR. Thus, supporting 
documentation may be disclosed to the authorities referenced above to 
whom a SAR form may be disclosed, consistent with the rules of 
construction, described below. For situations requiring immediate 
attention, Housing GSEs are to telephone the appropriate law 
enforcement authority in addition to filing a SAR.
    Section 1030.320(c) provides that the filing Housing GSE must 
maintain copies of SARs and the underlying related documentation for a 
period of five years from the date of filing.\43\ As indicated above, 
supporting documentation is to be made available to FinCEN and 
appropriate law enforcement and regulatory authorities, upon request.
---------------------------------------------------------------------------

    \43\ FinCEN notes that FHFA's guidance on fraud reporting, RPG-
2011-001, also contains a five-year document retention requirement.
---------------------------------------------------------------------------

    Section 1030.320(d)(1) reinforces the statutory prohibition against 
the disclosure by a financial institution of a SAR (regardless of 
whether the report would be required by the Final Rule or is filed 
voluntarily).\44\ The section requires that a SAR and information that 
would reveal the existence of that SAR (``SAR information'') be kept 
confidential and not be disclosed, except as authorized within the 
rules of construction. The regulation includes rules of construction 
that identify actions an institution may take that are not precluded by 
the confidentiality provision. These actions include the disclosure of 
SAR information to FinCEN, FHFA, or appropriate Federal, State, or 
local law enforcement agencies, or a Federal regulatory authority that 
examines the Housing GSE for compliance with the BSA. This 
confidentiality provision also does not prohibit the disclosure of the 
underlying facts, transactional information, and documents upon which a 
SAR is based, or the sharing of SAR information within the Housing 
GSE's corporate organizational structure for purposes consistent with 
Title II of the BSA, as determined by FinCEN in regulation or in 
guidance.\45\
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    \44\ 31 U.S.C. 5318(g)(2).
    \45\ On November 23, 2010, FinCEN issued updated guidance for 
the banking, securities, and futures industries authorizing the 
sharing of SAR information with parent companies, head offices, and 
under certain conditions, domestic affiliates. 75 FR 75607 (Dec. 3, 
2010). No such guidance has been issued for the Housing GSEs.
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    Section 1030.320(d)(2) incorporates the statutory prohibition 
against disclosure of SAR information, other than in fulfillment of 
their official duties consistent with the BSA, by government users of 
SAR data. The section also clarifies that official duties

[[Page 10374]]

do not include the disclosure of SAR information in response to a 
request for non-public information \46\ or for use in a private legal 
proceeding, including a request under 31 CFR 1.11.\47\
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    \46\ For purposes of this rulemaking, ``non-public information'' 
refers to information that is exempt from disclosure under the 
Freedom of Information Act.
    \47\ 31 CFR 1.11 is the Department of the Treasury's information 
disclosure regulation. Generally, these regulations are known as 
``Touhy regulations,'' after the Supreme Court's decision in United 
States ex rel. Touhy v. Ragen, 340 U.S. 462 (1951). In that case, 
the Supreme Court held that an agency employee could not be held in 
contempt for refusing to disclose agency records or information when 
following the instructions of his or her supervisor regarding the 
disclosure. An agency's Touhy regulations are the instructions 
agency employees must follow when those employees receive requests 
or demands to testify or otherwise disclose agency records or 
information.
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    Section 1030.320(e) provides protection from liability for making 
reports of suspicious transactions, and for nondisclosures of such a 
report, to the full extent provided by 31 U.S.C. 5318(g)(3). This 
statutory safe harbor, unlike that afforded to the Housing GSEs under 
FHFA regulations,\48\ contains no express requirement that the report 
has been filed in ``good faith,'' and legal authority strongly supports 
the proposition that there is no implicit ``good faith'' limitation to 
this safe harbor.\49\ One commenter nevertheless suggested that the 
difference between FHFA safe harbor and the BSA safe harbor could 
result in the Housing GSEs being subject to civil liability for making 
reports pursuant to the BSA. FinCEN disagrees with that assessment. 
Because this Final Rule defines the Housing GSEs as financial 
institutions under the BSA, a Housing GSE should be able to avail 
itself of the broader BSA safe harbor for reports it files pursuant to 
the BSA. Congress has made two safe harbors available to institutions 
under two separate statutes. These safe harbor provisions do not 
contradict, supersede, or conflict with one another. Nothing in the law 
implies that Congress intended to make only the narrower safe harbor 
applicable when an institution was on its face entitled to both. FinCEN 
thinks it more persuasive to consider both safe harbors to be 
applicable according to their terms.
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    \48\ 12 CFR 1233.5.
    \49\ See Stoutt v. Banco Popular de Puerto Rico, 320 F.3d 26, 31 
(1st Cir. 2003) (no good faith requirement), Lee v. Bankers Trust, 
166 F.3d 540, 544 (2d Cir. 1999) (same), Henry v. Bank of America, 
2010 U.S. Dist. LEXIS 14561 *11-13 (N.D.Cal., Feb. 2, 2010) (same), 
Eyo v. United States, 2007 U.S. Dist. LEXIS 88088 *15-16 (D.N.J., 
Nov. 29, 2007) (same), Nieman v. Firstar Bank, 2005 U.S. Dist. LEXIS 
38959 *18 (N.D. Iowa, Sept. 26, 2005) (same). But see Lopez v. First 
Union National Bank, 129 F.3d 1186, 1992 (11th Cir. 1997) (regarding 
a good faith requirement).
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    Section 1030.320(f) notes that compliance with the obligation to 
report suspicious transactions will be examined by FinCEN or its 
delegates, and provides that failure to comply with the Final Rule may 
constitute a violation of the BSA and FinCEN's regulations.
    Section 1030.320(g) provides that the new SAR requirement is 
effective when an anti-money laundering program required by the 
regulations is required to be implemented.

E. Special Information Procedures To Deter Money Laundering and 
Terrorist Activity

    Section 1030.500 states that the Housing GSEs are covered by the 
special information procedures to detect money laundering and terrorist 
activity requirements set forth and cross referenced in sections 
1030.520 (cross-referencing to 31 CFR 1010.520) and 1030.540 (cross-
referencing to 31 CFR 1010.540). Sections 1010.520 and 1010.540 
implement sections 314(a) and 314(b) \50\ of the USA PATRIOT Act, 
respectively, and generally apply to any financial institution listed 
in 31 U.S.C. 5312(a)(2).\51\ For the sake of clarity, the Final Rule 
adds subpart E to Part 1030 to confirm that the section 314 rules will 
continue to apply to the Housing GSEs.
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    \50\ In addition to falling within the definition of ``financial 
institution'' found at 31 U.S.C. 5312(a)(2), participants in the 
314(b) program also must be ``required . . . to establish and 
maintain an anti-money laundering program . . .'' 31 CFR 
1010.540(a)(1).
    \51\ This Final Rule defines the Housing GSEs as financial 
institutions under section 31 U.S.C. 5312(a)(2)(Y).
---------------------------------------------------------------------------

IV. Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires that 
a regulation that has a significant economic impact on a substantial 
number of small entities, small businesses, or small organizations must 
include an initial regulatory flexibility analysis describing the 
regulation's impact on small entities. Such an analysis need not be 
undertaken if the agency has certified that the regulation will not 
have a significant economic impact on a substantial number of small 
entities. 5 U.S.C. 605(b). In this case, the Final Rule applies only to 
the Housing GSEs, none of which is a small entity for purposes of this 
requirement. Accordingly, FinCEN hereby certifies that this Final Rule 
will not have a significant economic impact on a substantial number of 
small entities for purposes of the Regulatory Flexibility Act. 
Therefore, no analysis under the Regulatory Flexibility Act is 
required. See 5 U.S.C. 601(2) and 603(a).

V. Paperwork Reduction Act

    This Final Rule pertains to the Housing GSEs. As a result, the 
Final Rule does not contain any information collection requirement that 
requires the approval of the Office of Management and Budget under the 
Paperwork Reduction Act. See 44 U.S.C. 3501 et seq.

VI. Executive Orders 13563 and 12866

    Executive Orders 13563 and 12866 direct agencies to assess costs 
and benefits of available regulatory alternatives and, if regulation is 
necessary, to select regulatory approaches that maximize net benefits 
(including potential economic, environmental, public health and safety 
effects, distributive impacts, and equity). Executive Order 13563 
emphasizes the importance of quantifying both costs and benefits, of 
reducing costs, of harmonizing rules, and of promoting flexibility. It 
has been determined that this Final Rule is designated a ``significant 
regulatory action,'' although not economically significant, under 
section 3(f) of Executive Order 12866. Accordingly, the Final Rule has 
been reviewed by the Office of Management and Budget.

VII. Unfunded Mandates Reform Act of 1995 Statement

    Section 202 of the Unfunded Mandates Reform Act of 1995 (``Unfunded 
Mandates Act''), Public Law 104-4 (March 22, 1995), requires that an 
agency prepare a budgetary impact statement before promulgating a rule 
that may result in expenditure by the State, local, and tribal 
governments, in the aggregate, or by the private sector, of $100 
million or more in any one year. If a budgetary impact statement is 
required, section 202 of the Unfunded Mandates Act also requires an 
agency to identify and consider a reasonable number of regulatory 
alternatives before promulgating a rule. Taking into account the 
factors noted above and using conservative estimates of average labor 
costs in evaluating the cost of the burden imposed by the Final Rule, 
FinCEN has determined that it is not required to prepare a written 
statement under Section 202.

List of Subjects in 31 CFR Parts 1010 and 1030

    Administrative practice and procedure, Banks, Banking, Brokers, 
Currency, Federal home loan banks, Foreign banking, Foreign currencies, 
Gambling, Investigations, Mortgages,

[[Page 10375]]

Penalties, Reporting and recordkeeping requirements, Securities, 
Terrorism.

Authority and Issuance

    For the reasons set forth in the preamble, Chapter X of Title 31 of 
the Code of Federal Regulations is amended as follows:

PART 1010--GENERAL PROVISIONS

0
1. The authority citation for part 1010 continues to read as follows:

    Authority: 12 U.S.C. 1829b and 1951-1959; 31 U.S.C. 5311-5314 
and 5316-5332; title III, sec. 314 Pub. L. 107-56, 115 Stat. 307.


0
2. Amend Sec.  1010.100 by adding new paragraph (mmm) to read as 
follows:


Sec.  1010.100  General definitions.

* * * * *
    (mmm) Housing government sponsored enterprise. (1) A ``housing 
government sponsored enterprise'' is one of the following ``Regulated 
Entities'' under 12 U.S.C. 4502(20) subject to the general supervision 
and regulation of the Federal Housing Finance Agency (FHFA):
    (i) The Federal National Mortgage Association;
    (ii) The Federal Home Loan Mortgage Corporation; or
    (iii) Each Federal Home Loan Bank.
    (2) The term ``housing government sponsored enterprise'' does not 
include any ``Entity-Affiliated Party,'' as defined in 12 U.S.C. 
4502(11).

0
3. Amend Sec.  1010.810 by adding new paragraph (b)(10) to read as 
follows:


Sec.  1010.810  Enforcement.

* * * * *
    (b) * * *
    (10) To the Federal Housing Finance Agency with respect to the 
housing government sponsored enterprises, as defined in Sec.  
1010.100(mmm) of this part.
* * * * *

0
4. New part 1030 is added to read as follows:

PART 1030--RULES FOR HOUSING GOVERNMENT SPONSORED ENTERPRISES

Subpart A--Definitions
Sec.
1030.100 Definitions.
Subpart B--Programs
1030.200 General.
1030.210 Anti-money laundering programs for housing government 
sponsored enterprises.
Subpart C--Reports Required To Be Made By Housing Government Sponsored 
Enterprises
1030.300 General.
1030.310-1030.315 [Reserved]
1030.320 Reports by housing government sponsored enterprises of 
suspicious transactions.
1030.330 Reports relating to currency in excess of $10,000 received 
in a trade or business.
Subpart D--Records Required To Be Maintained by Housing Government 
Sponsored Enterprises
1030.400 General.
Subpart E--Special Information Sharing Procedures To Deter Money 
Laundering and Terrorist Activity
1030.500 General.
1030.520 Special information sharing procedures to deter money 
laundering and terrorist activity for housing government sponsored 
enterprises.
1030.530 [Reserved]
1030.540 Voluntary information sharing among financial institutions.
Subpart F--Special Standards of Diligence; Prohibitions, and Special 
Measures for Housing Government Sponsored Enterprises
1030.600-1030.670 [Reserved]

    Authority: 12 U.S.C. 1829b and 1951-1959; 31 U.S.C. 5311-5314 
and 5316-5332; title III, sec. 314 Pub. L. 107-56, 115 Stat. 307.

Subpart A--Definitions


Sec.  1030.100  Definitions.

    Refer to Sec.  1010.100 of this chapter for general definitions not 
noted herein.

Subpart B--Programs


Sec.  1030.200  General.

    Housing government sponsored enterprises are subject to the program 
requirements set forth and cross referenced in this subpart. Housing 
government sponsored enterprises should also refer to subpart B of part 
1010 of this chapter for program requirements contained in that subpart 
that apply to housing government sponsored enterprises.


Sec.  1030.210  Anti-money laundering programs for housing government 
sponsored enterprises.

    (a) Anti-money laundering program requirements for housing 
government sponsored enterprises. Each housing government sponsored 
enterprise shall develop and implement a written anti-money laundering 
program that is reasonably designed to prevent the housing government 
sponsored enterprise from being used to facilitate money laundering or 
the financing of terrorist activities. The program must be approved by 
senior management. A housing government sponsored enterprise shall make 
a copy of its anti-money laundering program available to the Financial 
Crimes Enforcement Network or its designee upon request.
    (b) Minimum requirements. At a minimum, the anti-money laundering 
program shall:
    (1) Incorporate policies, procedures, and internal controls based 
upon the housing government sponsored enterprise's assessment of the 
money laundering and terrorist financing risks associated with its 
products and services. Policies, procedures, and internal controls 
developed and implemented by a housing government sponsored enterprise 
under this section shall include provisions for complying with the 
applicable requirements of subchapter II of chapter 53 of title 31, 
United States Code and this part, and obtaining all relevant customer-
related information necessary for an effective anti-money laundering 
program.
    (2) Designate a compliance officer who will be responsible for 
ensuring that:
    (i) The anti-money laundering program is implemented effectively;
    (ii) The anti-money laundering program is updated as necessary; and
    (iii) Appropriate persons are educated and trained in accordance 
with paragraph (b)(3) of this section.
    (3) Provide for on-going training of appropriate persons concerning 
their responsibilities under the program. A housing government 
sponsored enterprise may satisfy this requirement by training such 
persons or verifying that such persons have received training by a 
competent third party with respect to the products and services offered 
by the housing government sponsored enterprise.
    (4) Provide for independent testing to monitor and maintain an 
adequate program. The scope and frequency of the testing shall be 
commensurate with the risks posed by the housing government sponsored 
enterprise's products and services. Such testing may be conducted by a 
third party or by any officer or employee of the housing government 
sponsored enterprise, other than the person designated in paragraph 
(b)(2) of this section.
    (c) Compliance. Compliance with this section shall be examined by 
FinCEN or its delegate, under the terms of the Bank Secrecy Act. 
Failure to comply with the requirements of this section may constitute 
a violation of the Bank Secrecy Act and of this chapter.
    (d) Compliance date. A housing government sponsored enterprise must 
develop and implement an anti-money laundering program that complies 
with the requirements of this section on or before August 25, 2014.

[[Page 10376]]

Subpart C--Reports Required To Be Made by Housing Government 
Sponsored Enterprises


Sec.  1030.300  General.

    Housing government sponsored enterprises are subject to the 
reporting requirements set forth and cross referenced in this subpart. 
Housing government sponsored enterprises should also refer to subpart C 
of part 1010 of this chapter for reporting requirements contained in 
that subpart that apply to housing government sponsored enterprises.


Sec. Sec.  1030.310--1030.315  [Reserved]


Sec.  1030.320  Reports by housing government sponsored enterprises of 
suspicious transactions.

    (a) General--(1) Every housing government sponsored enterprise 
shall file with FinCEN, to the extent and in the manner required by 
this section, a report of any suspicious transaction relevant to a 
possible violation of law or regulation. A housing government sponsored 
enterprise may also file with FinCEN a report of any suspicious 
transaction that it believes is relevant to the possible violation of 
any law or regulation, but whose reporting is not required by this 
section.
    (2) A transaction requires reporting under this section if it is 
conducted or attempted by, at, or through a housing government 
sponsored enterprise, it involves or aggregates funds or other assets 
of at least $5,000, and the housing government sponsored enterprise 
knows, suspects, or has reason to suspect that the transaction (or a 
pattern of transactions of which the transaction is a part):
    (i) Involves funds derived from illegal activity or is intended or 
conducted in order to hide or disguise funds or assets derived from 
illegal activity (including, without limitation, the ownership, nature, 
source, location, or control of such funds or assets) as part of a plan 
to violate or evade any Federal law or regulation or to avoid any 
transaction reporting requirement under Federal law or regulation;
    (ii) Is designed, whether through structuring or other means, to 
evade any requirements of this chapter or any other regulations 
promulgated under the Bank Secrecy Act;
    (iii) Has no business or apparent lawful purpose or is not the sort 
in which the particular housing government sponsored enterprise 
customer would normally be expected to engage, and the housing 
government sponsored enterprise knows of no reasonable explanation for 
the transaction after examining the available facts, including the 
background and possible purpose of the transaction; or
    (iv) Involves use of the housing government sponsored enterprise to 
facilitate criminal activity.
    (3) More than one housing government sponsored enterprise may have 
an obligation to report the same transaction under this section, and 
financial institutions involved in that same transaction may have 
separate obligations to report suspicious activity with respect to that 
transaction pursuant to other provisions of this chapter. In those 
instances, no more than one report is required to be filed by the 
housing government sponsored enterprise(s) and any financial 
institution(s) involved in the transaction, provided that the report 
filed contains all relevant facts, including the name of each housing 
government sponsored enterprise or financial institution involved in 
the transaction, the report complies with all instructions applicable 
to joint filings, and each institution maintains a copy of the report 
filed, along with any supporting documentation.
    (b) Filing and notification procedures--(1) What to file. A 
suspicious transaction shall be reported by completing a Suspicious 
Activity Report (``SAR''), and collecting and maintaining supporting 
documentation as required by paragraph (c) of this section.
    (2) Where to file. The SAR shall be filed with FinCEN in accordance 
with the instructions to the SAR.
    (3) When to file. A SAR shall be filed no later than 30 calendar 
days after the date of the initial detection by the reporting housing 
government sponsored enterprise of facts that may constitute a basis 
for filing a SAR under this section. If no suspect is identified on the 
date of such initial detection, a housing government sponsored 
enterprise may delay filing a SAR for an additional 30 calendar days to 
identify a suspect, but in no case shall reporting be delayed more than 
60 calendar days after the date of such initial detection.
    (4) Mandatory notification to law enforcement. In situations 
involving violations that require immediate attention, such as 
suspected terrorist financing or ongoing money laundering schemes, a 
housing government sponsored enterprise shall immediately notify by 
telephone an appropriate law enforcement authority in addition to 
filing timely a SAR.
    (5) Voluntary notification to FinCEN. Any housing government 
sponsored enterprise wishing voluntarily to report suspicious 
transactions that may relate to terrorist activity may call FinCEN's 
Financial Institutions Hotline in addition to filing timely a SAR if 
required by this section.
    (c) Retention of records. A housing government sponsored enterprise 
shall maintain a copy of any SAR filed by the housing government 
sponsored enterprise or on its behalf (including joint reports), and 
the original (or business record equivalent) of any supporting 
documentation concerning any SAR that it files (or is filed on its 
behalf), for a period of five years from the date of filing the SAR. 
Supporting documentation shall be identified as such and maintained by 
the housing government sponsored enterprise, and shall be deemed to 
have been filed with the SAR. A housing government sponsored enterprise 
shall make all supporting documentation available to FinCEN or any 
Federal, State, or local law enforcement agency, or any Federal 
regulatory authority that examines the housing government sponsored 
enterprise for compliance with the Bank Secrecy Act, upon request.
    (d) Confidentiality of SARs. A SAR, and any information that would 
reveal the existence of a SAR, are confidential and shall not be 
disclosed except as authorized in this paragraph (d). For purposes of 
this paragraph (d) only, a SAR shall include any suspicious activity 
report filed with FinCEN pursuant to any regulation in this chapter.
    (1) Prohibition on disclosures by housing government sponsored 
enterprises--(i) General rule. No housing government sponsored 
enterprise, and no director, officer, employee, or agent of any housing 
government sponsored enterprise, shall disclose a SAR or any 
information that would reveal the existence of a SAR. Any housing 
government sponsored enterprise, and any director, officer, employee, 
or agent of any housing government sponsored enterprise that is 
subpoenaed or otherwise requested to disclose a SAR or any information 
that would reveal the existence of a SAR, shall decline to produce the 
SAR or such information, citing this section and 31 U.S.C. 
5318(g)(2)(A)(i), and shall notify FinCEN of any such request and the 
response thereto.
    (ii) Rules of construction. Provided that no person involved in any 
reported suspicious transaction is notified that the transaction has 
been reported, this paragraph (d)(1) shall not be construed as 
prohibiting:
    (A) The disclosure by a housing government sponsored enterprise, or 
any director, officer, employee, or agent of a housing government 
sponsored enterprise of:

[[Page 10377]]

    (1) A SAR, or any information that would reveal the existence of a 
SAR, to FinCEN or any Federal, State, or local law enforcement agency, 
or any Federal regulatory authority that examines the housing 
government sponsored enterprise for compliance with the Bank Secrecy 
Act; or
    (2) The underlying facts, transactions, and documents upon which a 
SAR is based, including but not limited to, disclosures to another 
housing government sponsored enterprise or a financial institution, or 
any director, officer, employee, or agent of a housing government 
sponsored enterprise or financial institution, for the preparation of a 
joint SAR; or
    (B) The sharing by a housing government sponsored enterprise, or 
any director, officer, employee, or agent of the housing government 
sponsored enterprise, of a SAR, or any information that would reveal 
the existence of a SAR, within the housing government sponsored 
enterprise's corporate organizational structure for purposes consistent 
with Title II of the Bank Secrecy Act as determined by regulation or in 
guidance.
    (2) Prohibition on disclosures by government authorities. A 
Federal, State, local, territorial, or tribal government authority, or 
any director, officer, employee, or agent of any of the foregoing, 
shall not disclose a SAR, or any information that would reveal the 
existence of a SAR, except as necessary to fulfill official duties 
consistent with Title II of the Bank Secrecy Act. For purposes of this 
section, ``official duties'' shall not include the disclosure of a SAR, 
or any information that would reveal the existence of a SAR, in 
response to a request for disclosure of non-public information or a 
request for use in a private legal proceeding, including a request 
pursuant to 31 CFR 1.11.
    (e) Limitation on liability. A housing government sponsored 
enterprise, and any director, officer, employee, or agent of any 
housing government sponsored enterprise, that makes a voluntary 
disclosure of any possible violation of law or regulation to a 
government agency or makes a disclosure pursuant to this section or any 
other authority, including a disclosure made jointly with another 
institution, shall be protected from liability for any such disclosure, 
or for failure to provide notice of such disclosure to any person 
identified in the disclosure, or both, to the full extent provided by 
31 U.S.C. 5318(g)(3).
    (f) Compliance. Housing government sponsored enterprises shall be 
examined by FinCEN or its delegate for compliance with this section. 
Failure to satisfy the requirements of this section may be a violation 
of the Bank Secrecy Act and of this chapter.
    (g) Applicability date. This section is effective when an anti-
money laundering program required by Sec.  1030.210 of this part is 
required to be implemented.


Sec.  1030.330  Reports relating to currency in excess of $10,000 
received in a trade or business.

    Refer to Sec.  1010.330 of this chapter for rules regarding the 
filing of reports relating to currency in excess of $10,000 received by 
housing government sponsored enterprises.

Subpart D--Records Required To Be Maintained by Housing Government 
Sponsored Enterprises


Sec.  1030.400  General.

    Housing government sponsored enterprises are subject to the 
recordkeeping requirements set forth and cross referenced in this 
subpart. Housing government sponsored enterprises should also refer to 
subpart D of part 1010 of this chapter for recordkeeping requirements 
contained in that subpart that apply to housing government sponsored 
enterprises.

Subpart E--Special Information Sharing Procedures To Deter Money 
Laundering and Terrorist Activity


Sec.  1030.500  General.

    Housing government sponsored enterprises are subject to special 
information sharing procedures to deter money laundering and terrorist 
activity requirements set forth and cross referenced in this subpart. 
Housing government sponsored enterprises should also refer to subpart E 
of part 1010 of this chapter for special information sharing procedures 
to deter money laundering and terrorist activity contained in that 
subpart that apply to housing government sponsored enterprises.


Sec.  1030.520  Special information sharing procedures to deter money 
laundering and terrorist activity for housing government sponsored 
enterprises.

    (a) Refer to Sec.  1010.520 of this chapter.
    (b) [Reserved]


Sec.  1030.530  [Reserved]


Sec.  1030.540  Voluntary information sharing among financial 
institutions.

    (a) Refer to Sec.  1010.540 of this chapter.
    (b) [Reserved]

Subpart F--Special Standards of Diligence; Prohibitions, and 
Special Measures for Housing Government Sponsored Enterprises


Sec. Sec.  1030.600-1030.670  [Reserved]

    Dated: February 20, 2014.
Jennifer Shasky Calvery,
Director, Financial Crimes Enforcement Network.
[FR Doc. 2014-04125 Filed 2-24-14; 8:45 am]
BILLING CODE 4802-02-P