FinCEN (FinCEN)
The bureau of the US Treasury that administers the Bank Secrecy Act. FinCEN writes the anti-money-laundering rules applying to financial institutions, receives suspicious activity and currency transaction reports, and maintains the federal register of money services businesses.
Also called: Financial Crimes Enforcement Network
FinCEN’s authority comes from the Bank Secrecy Act and the regulations made under it. Three functions follow. It makes rules — who counts as a money services business, what an anti-money-laundering program must contain, when the travel rule applies. It collects and analyzes reports, principally suspicious activity reports and currency transaction reports, and makes the resulting intelligence available to law enforcement. And it enforces, bringing civil money penalty actions against institutions and, at times, against named compliance officers personally.
What FinCEN does not do
It does not authorize anyone to move money. A US money transmitter needs a license from each state it operates in, granted by that state’s banking or financial services department, and the federal registration filed with FinCEN sits alongside those licenses without substituting for any of them. A company holding a FinCEN registration and no state license is registered and unlicensed, which is not a lawful position to be operating from.
In practice
FinCEN does not license anyone. It receives registrations and reports and enforces the Bank Secrecy Act; the authority to transmit money in the United States comes from the states, one license at a time.
Example
A payments startup files its FinCEN registration in week one and treats the confirmation as permission to launch. It is not. The registration tells the Treasury the business exists and pulls it inside Bank Secrecy Act obligations. Every state where its customers sit still has to grant a license, and operating before they do is unlicensed money transmission.
Commonly confused with
| Term | How it differs |
|---|---|
| OFAC | Both sit inside the US Treasury, but OFAC administers sanctions and blocking obligations while FinCEN administers the Bank Secrecy Act and its reporting regime. |
| CSBS | FinCEN is a federal agency with rulemaking and enforcement power; CSBS is a membership body for state regulators with neither. |
See also
- FinCEN RegistrationThe federal filing a money services business makes with FinCEN, on Form 107, to put itself on the Treasury’s MSB register. It must be renewed every two years. It is a notification that the business exists, not an approval of it.
- Bank Secrecy ActThe Bank Secrecy Act is the 1970 United States statute, heavily amended since, that requires banks, money services businesses and other financial institutions to keep records, register where applicable, report large cash transactions and suspicious activity, and maintain an anti-money-laundering program.
- Suspicious Activity ReportA suspicious activity report is a confidential filing made to FinCEN when a US financial institution knows, suspects, or has reason to suspect that a transaction above a set dollar floor involves illicit funds, has no apparent lawful purpose, or is designed to evade reporting rules. It is filed without telling the customer.
- Money Services BusinessA money services business is a category in US federal law under the Bank Secrecy Act, covering seven capacities: dealer in foreign exchange, check casher, issuer or seller of money orders or traveler’s checks, provider of prepaid access, seller of prepaid access, money transmitter, and the US Postal Service.