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FinCEN, Bank Secrecy Act and planned developments.

FCRO Subsection: 

Kenneth A. Blanco, Director, FinCEN (The Financial Crimes Enforcement Network, the USA's FIU and a division of the Department of the Treasury) sets out how Bank Secrecy Act data, including "convertible virtual currencies."

The BSA Value Project

Because BSA reporting is so valuable, we must (1) ensure it is collected efficiently, (2) use it to the greatest extent possible and (3) effectively communicate its use and value.

Earlier this year, FinCEN began the BSA Value Project, a study and analysis of the value of the BSA information we receive. We are working to provide comprehensive and quantitative understanding of the broad value of BSA reporting and other BSA information in order to make it more effective and its collection more efficient.

FinCEN is using the BSA Value Project to improve how we communicate the value and use of BSA information and to develop metrics to track and measure the value of its use on an ongoing basis.

The project has involved the gathering and review of reams of data, statistics, case studies, and other information, as well as holding detailed interviews with a wide range of government and private-sector stakeholders.

That information has informed us about how each stakeholder uses and gains value from BSA reporting and the value-adding activities of other stakeholders.

This “value chain” of BSA reporting is being developed for each type of stakeholder: FinCEN, law enforcement, industry, regulators and others.

We are validating these results with the agencies and firms that have contributed to their development and soon we will be talking with some of you about the value chain that has been developed for financial institutions to ensure it captures every aspect properly.

As of today, the team has identified over 500 different measurements that are being incorporated into the valuation model. We expect the model to show us the relative value of specific forms and even key fields—what is seen as more valuable and what is seen as less valuable.

This value quantification model will help us assess how the regulatory and compliance changes we are considering making with our government partners will affect the value of BSA reporting—we want any changes to lead to more effective results and increase the value of BSA reporting, not just provide greater industry efficiency.

It will help us provide you with better and more targeted feedback on the information you report so you can identify whether it is the automated tools and databases or the more manual work of your internal financial intelligence units and investigators that is driving that value creation in specific instances.

The project also is showing us specific challenges that we need to address, particularly in the area of communication and the development of shared AML priorities on which we can focus our efforts.

I also want to make very clear that the value of BSA data is not just confined to FinCEN, law enforcement, or the government. Industry also benefits. Financial institutions and other reporting entities derive important value from their BSA compliance and reporting activities. Throughout the study, industry consistently has confirmed that their BSA obligations, while incurring costs, also help them:

* identify and exit bad actors to avoid reputational and financial risks;

* manage risks more effectively to permit greater responsible revenue generation;

* secure partnerships and investment opportunities domestically and internationally in a responsible, risk-sensitive manner, something particularly important for emerging entrants in the financial services arena and, of course;

* avoid financial, operational and reputational costs from non-compliance.

I want to stress that we intend to be as transparent and public facing as possible about the results from this project. FinCEN hopes to show the tremendous variety of uses we have for your reporting.

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