OCC Releases Final Rule Authorizing SAR Exemptions | PC Weiner Brodsky Kider

The OCC recently released a final rule that amends the OCC’s Suspicious Activity Reporting (SAR) regulations and allows the agency to exempt certain financial institutions from the requirements of the SAR regulations upon written request. The final rule aligns the legal authority of the OCC with the exemption authority of FinCEN. In light of the development of financial technology and innovation, the “regulatory flexibility” offered by this final rule allows the OCC to grant exemption to national banks and federal savings associations or service companies who use new or innovative approaches to monitoring, investigating and filing SAR. which do not fully meet regulatory requirements, but which otherwise comply with anti-money laundering regulatory standards and security and soundness standards.

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

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

This rule comes into effect on May 1, 2022.

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