FinCEN Begins Regulatory Process to Issue No-Action Letters

FinCEN, the Financial Crimes Enforcement Network of the U.S. Treasury, today issued an Advance Notice of Proposed Rulemaking (ANPRM) to solicit public comment its of a no-action letter process. No-action letters are a form of enforcement discretion where an agency states by letter that it will not take an enforcement action against the submitting party for the specific conduct presented to the agency.

Lawyers often use no-action letters to obtain regulatory guidance for clients where circumstances fall in between existing regulations.

FinCEN's Acting Director, Himamauli Das said, "A no-action letter process has the potential to spur innovation and enhance overall effectiveness of the AML/CFT framework and the implementation of financial institutions' compliance programs." He noted that FinCNE will "encourage public comment on how the implementation of a no-action letter process can best achieve these objectives reflected in the Anti-Money Laundering Act of 2020."

The regulatory action follows FinCEN's year-old June 28, 2021 report to Congress. FinCEN's proposed action followed consultations with the Attorney General, the Federal functional regulators, State bank supervisors, State credit union supervisors, and other Federal agencies, as required by the Anti-Money Laundering Act of 2020.

In its 2021 report to Congress FinCEN determined it should undertake establish a no-action letter process to supplement the existing forms of regulatory guidance and relief that third parties may request from FinCEN. It cited several potential benefits of a no-action letter process, including encouraging a robust and productive dialogue with the public, promoting a culture of compliance, and enhancing transparency in the application and enforcement of the Bank Secrecy Act.

The addition of a no-action letter process at FinCEN could affect other forms of regulatory guidance and relief that FinCEN already offers, including administrative rulings and exceptive or exemptive relief. Accordingly, the ANPRM seeks public input on whether this process should be implemented, and if so, how a no-action letter process should interact with these other tools.

The ability to issue no-action letters should also be helpful to attorneys giving advice to clients on the Corporate Transparency Act.  Inevitably there will be clients with factual situations that do not fit neatly within the regulations that FinCEN will soon adopt.  Having the ability to seek regulatory guidance in the form of a no-action letter will help reporting companies get confidence that they are compliant. 

FinCEN strongly encourages all interested parties, including those that may want to participate in the no-action letter process, if implemented, to submit written comments no later than August 5, 2022.