The Financial Crimes Enforcement Network has announced a major internal restructuring designed to boost the agency’s efficiency and information-sharing. Knowing that the restructuring will have a resounding impact on both the law enforcement agencies that benefit from FinCEN’s data and the institutions regulated by the agency, ACFCS reached out to FinCEN Director Jennifer Shasky Calvery for more insight. Shasky Calvery, who began her post at FinCEN in September 2012, is a transplant from the Department of Justice, where she served for 15 years, including two as Chief of the Asset Forfeiture and Money Laundering Section.
In an in-depth Q&A with ACFCS, Shasky Calvery shared the reasons for the FinCEN revamp, her views on corporate transparency, and the agency’s progress on grappling with the customer due diligence and beneficial ownership proposed rules.
Congratulations, Jennifer, on your appointment and on FinCEN’s reorganization. What was behind your reorganization, and what does it mean to FinCEN’s original constituency of law enforcement agencies – let alone your other constituents.
I actually believe that the reorg is going to be a good thing for all of our different stakeholders: law enforcement, regulators, industry, foreign partners.
The idea behind it was twofold. One, to make sure that we’re as efficient as possible. FinCEN is a relatively small organization for the broad amount of responsibilities that we carry, so we need to make sure that we’re hitting on all cylinders. So firstly we wanted to make sure that we’re efficient.
Secondly, [the reorganization] is a recognition of what you call convergence – I would refer to it as creating a “bridge,” or translation.
FinCEN has a lot of different stakeholders and they don’t always speak the same languages. For example, law enforcement will often think about AML from the context of an underlying criminal threat – they’re thinking about a particular organized crime group, a drug trafficking organization, a terrorist organization, or a particular type of crime.
Then you shift over to regulators and industry, and they think about [AML] from a risk and vulnerabilities standpoint – they’re thinking about their financial products, their customers, the jurisdictions in which they’re operating, and what are the risks around those different aspects of their business. So the two of them try to speak to one another, and they often speak right past each other because they’re speaking entirely different languages.
I think FinCEN is in a great place and really carries a responsibility to be in the middle and to serve as a bridge between our two constituencies. Not just to enable them to speak to one another, but, when we’re issuing policy and when we’re putting out intelligence information, to put it out in the appropriate language for each of those recipients and to help to draw everybody together to ultimately work better together. This reorg, we believe, allows us to do that.
From the standpoint of the financial institutions and the other constituents you have in the private sector, what does this reorganization mean?
I think a perfect example is on the information sharing side of things. As I spoke to our colleagues and stakeholders in industry coming into this job, and asked them what it is they need from FinCEN, one of the common things I heard was “more information.” We at FinCEN provide information to [industry] through our reporting, but we could do a better job if we had more information on what it is they are looking for.
So I think this reorganization, to the extent that I envision it making it easier for us to collect and disseminate information, especially to law enforcement, will enable us to become experts in the presentation of the information that eventually goes to all of our stakeholders. If we learn something really important we should be sharing that with industry as well as with our law enforcement colleagues to the extent appropriate.
Will the reorganization at all affect the filing of SARs in the new SAR format?
Well, I think to the extent that we at FinCEN are providing better information to industry, they can file better SARs. We now have a Liaison Division, and we’ve long had a BSA resource center that takes in calls from industry when they have questions such as ‘How do we do e-filing?’ or ‘How do we handle this circumstance or that circumstance?’
We’ve had a very good BSA resource center (a helpdesk), and we have only enhanced that helpdesk through this reorganization. We now have an even better staff and have crosstraining across all of our functions.
So the FinCEN Resource Center that I see on your org chart, under the Liaison Division – that actually provides assistance to the private sector?
Yes. That center has historically taken in about 25,000 calls per year, and most of those are from the industry. We expect that to be going up. Everything from a big bank, to a small/medium community bank, to an MSB, a mom-and-pop check-casher, people that English is not their first language –it’s a real cross-section of the United States and of the industry.
So what does the Global Liaison group under your Liaison Division do?
FinCEN is the financial intelligence unit for the United States, and at this point the Financial Action Task Force has it as a standard that every country should establish an FIU of its own. There is a network of those FIUs now that consists of a little more than 130 different countries, which is known as the Egmont Group. That is how we share information from one country to the next. We’ll share the data we have with another country to help them with their law enforcement efforts and vice versa.
So the Global Liaison group does everything from trying to get more countries to become able to join Egmont – and they’ve done a fabulous job over the years of doing that – to giving the newer countries the technical assistance they need to be able to do the job and to safeguard the information appropriately, to ensuring that the caseload of matters that we have outstanding is moving. Everything along those lines, in terms of FIU to FIU work.
Where does the proposed beneficial owner regulation that FinCEN broached last year stand at this time? And how does it relate to any role that FinCEN anticipates under FATCA?
So there’s a few different parts to that question. First, what is the status of our CDD rule and its relationship to the beneficial ownership issue: in terms of status, we are in the interagency process right now. As you know, we had several public hearings all across the United States, which provided great input to be able to come up with the proposed rule, and now we have to go through the interagency clearing process.
One thing that I have learned in the past ten months is never to put an estimate on when that process will conclude, because there are a lot of variables outside of our control.
What I can say is that we’re still in it. We are still very strong proponents of the rulemaking and the need to get on top of this issue.
What is your view of FATCA, and where you see it evolving over the years, at least as far as FinCEN is concerned?
I definitely would defer to my colleagues at the IRS in terms of views on FATCA specifically, but what I can tell you is that I am a strong proponent of us getting transparency in our financial system, and particularly in grappling with this beneficial ownership issue.
When I was at the Justice Department as a prosecutor on the front lines, and then later as a policy person, I saw firsthand the problems that come from a lack of transparency. I saw the drug trafficking organizations, the organized crime organizations, the terrorist organizations, all using shell companies and a lack of transparency. It was the same thing with corrupt foreign officials and shell companies as a way to move money. It’s a serious problem.
Have you spoken out about the need for greater transparency in US corporations?
Yes, actually. I think I testified three times on the Hill about it when I was at the Department of Justice, and have carried those views forward to FinCEN.
You spoke earlier about the industry coming to FinCEN and saying “we could do a better job with more information.” Do you have more specific examples of information the industry was typically looking for from FinCEN?
Well they’re looking for everything they can get their hands on, quite frankly. Everything from typologies and trends, and the kinds of things they can use to program their own filters, and understand where they should be filing SARs and so forth, to very tactical information.
There’s kind of a constant call for us to give very specific information on individuals or companies and so forth and that has a lot of difficulties that go along with it. But certainly on the trends and schemes side of it, and what’s the latest information and what are the red flags that you should be looking out for, and indicators, et cetera – that’s the type of information that we can and should be providing.
So to the extent that we now have one intelligence division where all of our analysts reside, it’s just making us better able to, again, serve as that bridge between what we’re seeing as we support law enforcement on their tactical cases and put that information together, and then to draw that out into the types of indicators and general trends that we can be providing to industry.