Legal Definitions - FINCEN

FinCEN, which stands for the Financial Crimes Enforcement Network, is a bureau within the U.S. Department of the Treasury. Its primary mission is to safeguard the U.S. financial system from illicit use, combat money laundering, and promote national security through the strategic use of financial intelligence. FinCEN achieves this by collecting, analyzing, and disseminating financial transaction data, issuing regulations, and enforcing compliance with anti-money laundering (AML) laws.

Here are some examples of how FinCEN's role applies:

• Example 1: Bank Reporting of Suspicious Activity

  A large national bank notices a series of unusual, high-value cash deposits and withdrawals by a customer whose stated business does not typically involve such transactions. Following federal anti-money laundering (AML) regulations, the bank files a Suspicious Activity Report (SAR) with FinCEN. FinCEN then analyzes this report, potentially combining it with other financial data, to identify possible money laundering or other financial crimes.

  Explanation: This illustrates FinCEN's role in receiving and analyzing financial intelligence from institutions. Banks and other financial entities are legally obligated to report suspicious transactions to FinCEN, which then uses this information to detect and prevent financial crimes.

• Example 2: Regulatory Enforcement Against Non-Compliant Businesses

  A small, newly established online payment processor fails to implement adequate customer identification procedures (often called "Know Your Customer" or KYC) as required by federal law. FinCEN conducts an investigation and subsequently imposes a significant civil penalty on the payment processor for its non-compliance with anti-money laundering regulations.

  Explanation: This demonstrates FinCEN's authority to set regulations for financial institutions and enforce compliance. By penalizing non-compliant entities, FinCEN ensures that businesses uphold their responsibilities in preventing illicit financial activities.

• Example 3: Sharing Financial Intelligence with Law Enforcement

  Through its analysis of various financial transaction data, FinCEN identifies a complex web of transactions involving shell companies and overseas accounts that appear to be funding a known international terrorist organization. FinCEN then shares this crucial financial intelligence with the FBI and other federal law enforcement agencies, enabling them to track and disrupt the organization's financial networks.

  Explanation: This highlights FinCEN's function as a financial intelligence unit. It collects and analyzes vast amounts of data to identify patterns indicative of serious financial crimes, then disseminates this actionable intelligence to support law enforcement efforts against threats like terrorism and drug trafficking.