(a) General.
(1) Every investment company (as defined
in section 3 of the Investment Company Act of 1940 (15 U.S.C. 80a-3) (“Investment
Company Act”) that is an open-end company (as defined in section 5
of the Investment Company Act (15 U.S.C. 80a-5)) and that is registered,
or is required to register, with the Securities and Exchange Commission
pursuant to that Act (for purposes of this section, a “mutual fund”),
shall file with the Financial Crimes Enforcement Network, to the extent
and in the manner required by this section, a report of any suspicious
transaction relevant to a possible violation of law or regulation.
A mutual fund may also file with the Financial Crimes Enforcement
Network a report of any suspicious transaction that it believes is
relevant to the possible violation of any law or regulation, but whose
reporting is not required by this section. Filing a report of a suspicious
transaction does not relieve a mutual fund from the responsibility
of complying with any other reporting requirements imposed by the
Securities and Exchange Commission.
(2) A transaction requires reporting under
this section if it is conducted or attempted by, at, or through a
mutual fund, it involves or aggregates funds or other assets of at
least $5,000, and the mutual fund knows, suspects, or has reason to
suspect that the transaction (or a pattern of transactions of which
the transaction is a part):
(i) Involves funds derived from illegal
activity or is intended or conducted in order to hide or disguise
funds or assets derived from illegal activity (including, without
limitation, the ownership, nature, source, location, or control of
such funds or assets) as part of a plan to violate or evade any Federal
law or regulation or to avoid any transaction reporting requirement
under Federal law or regulation;
(ii) Is designed, whether through structuring
or other means, to evade any requirements of this chapter or any other
regulations promulgated under the Bank Secrecy Act;
(iii) Has no business or apparent lawful
purpose or is not the sort in which the particular customer would
normally be expected to engage, and the mutual fund knows of no reasonable
explanation for the transaction after examining the available facts,
including the background and possible purpose of the transaction;
or
(iv) Involves
use of the mutual fund to facilitate criminal activity.
(3) More than one mutual
fund may have an obligation to report the same transaction under this
section, and other financial institutions may have separate obligations
to report suspicious activity with respect to the same transaction
pursuant to other provisions of this chapter. In those instances,
no more than one report is required to be filed by the mutual fund(s)
and other financial institution(s) involved in the transaction, provided
that the report filed contains all relevant facts, including the name
of each financial institution and the words “joint filing” in the
narrative section, and each institution maintains a copy of the report
filed, along with any supporting documentation.
3-1727.21
(b) Filing and notification
procedures.
(1) What to file. A suspicious transaction shall be reported by completing a Suspicious
Activity Report (“SAR”), and collecting and maintaining supporting
documentation as required by paragraph (c) of this section.
(2) Where to file. Form SAR shall be filed with the Financial Crimes
Enforcement Network in accordance with the instructions to the Form
SAR.
(3) When to file. A Form SAR shall be filed
no later than 30 calendar days after the date of the initial detection
by the reporting mutual fund of facts that may constitute a basis
for filing a Form SAR under this section. If no suspect is identified
on the date of such initial detection, a mutual fund may delay filing
a Form SAR for an additional 30 calendar days to identify a suspect,
but in no case shall reporting be delayed more than 60 calendar days
after the date of such initial detection.
(4) Mandatory
notification to law enforcement. In situations involving violations
that require immediate attention, such as suspected
terrorist financing or ongoing money laundering schemes, a mutual
fund shall immediately notify by telephone an appropriate law enforcement
authority in addition to filing timely a Form SAR.
(5) Voluntary
notification to the Financial Crimes Enforcement Network or the Securities
and Exchange Commission. Mutual funds wishing voluntarily to
report suspicious transactions that may relate to terrorist activity
may call the Financial Crimes Enforcement Network’s Financial Institutions
Hotline at 1-866-556-3974 in addition to filing timely a Form SAR
if required by this section. The mutual fund may also, but is not
required to, contact the Securities and Exchange Commission to report
in such situations.
(c) Retention of records. A mutual
fund shall maintain a copy of any Form SAR filed by the fund or on
its behalf (including joint reports), and the original (or business
record equivalent) of any supporting documentation concerning any
Form SAR that it files (or is filed on its behalf), for a period of
five years from the date of filing the Form SAR. Supporting documentation
shall be identified as such and maintained by the mutual fund, and
shall be deemed to have been filed with the Form SAR. The mutual fund
shall make all supporting documentation available to FinCEN or any
Federal, State, or local law enforcement agency, or any Federal regulatory
authority that examines the mutual fund for compliance with the Bank
Secrecy Act, upon request.
3-1727.22
(d) Confidentiality of SARs. A SAR, and any
information that would reveal the existence of a SAR, are confidential
and shall not be disclosed except as authorized in this paragraph
(d). For purposes of this paragraph (d) only, a SAR shall include
any suspicious activity report filed with FinCEN pursuant to any regulation
in this chapter.
(1) Prohibition
on disclosures by mutual funds.
(i) General rule. No mutual fund, and no director,
officer, employee, or agent of any mutual fund, shall disclose a SAR
or any information that would reveal the existence of a SAR. Any mutual
fund, and any director, officer, employee, or agent of any mutual
fund that is subpoenaed or otherwise requested to disclose a SAR or
any information that would reveal the existence of a SAR, shall decline
to produce the SAR or such information, citing this section and 31
U.S.C. 5318(g)(2)(A)(i), and shall notify FinCEN of any such request
and the response thereto.
(ii) Rules
of construction. Provided that no person involved in any reported
suspicious transaction is notified that the transaction has been reported,
this paragraph (d)(1) shall not be construed as prohibiting:
(A) The disclosure
by a mutual fund, or any director, officer, employee, or agent of
a mutual fund, of:
(1) A SAR, or any information that would reveal the existence
of a SAR, to FinCEN or any Federal, State, or local law enforcement
agency, or any Federal regulatory authority that examines the mutual
fund for compliance with the Bank Secrecy Act; or
(2) The underlying facts, transactions,
and documents upon which a SAR is based, including but not limited
to, disclosures to another financial institution, or any director,
officer, employee, or agent of a financial institution, for the preparation
of a joint SAR; or
(B) The sharing by a mutual fund, or any director,
officer, employee, or agent of the mutual fund, of a SAR, or any information
that would reveal the existence of a SAR, within the mutual fund’s
corporate organizational structure for purposes consistent with title
II of the Bank Secrecy Act as determined by regulation or in guidance.
(2) Prohibition on disclosures by government
authorities. A Federal, State, local, territorial, or Tribal
government authority, or any director, officer, employee, or agent
of any of the foregoing, shall not disclose a SAR, or any information
that would reveal the existence of a SAR, except as necessary to fulfill
official duties consistent with title II of the Bank Secrecy Act.
For purposes of this section, “official duties” shall not include
the disclosure of a SAR, or any information that would reveal the
existence of a SAR, in response to a request for disclosure of non-public
information or a request for use in a private legal proceeding, including
a request pursuant to 31 CFR 1.11.
(e) Limitation on liability. A mutual fund,
and any director, officer, employee, or agent of any mutual fund,
that makes a voluntary disclosure of any possible violation of law
or regulation to a government agency or makes a disclosure pursuant
to this section or any other authority, including a disclosure made
jointly with another institution, shall be protected from liability
to any person for any such disclosure, or for failure to provide notice
of such disclosure to any person identified in the disclosure, or
both, to the full extent provided by 31 U.S.C. 5318(g)(3).
(f) Compliance. Mutual
funds shall be examined by FinCEN or its delegatees for compliance
with this section. Failure to satisfy the requirements of this section
may be a violation of the Bank Secrecy Act and of this chapter.
(g) Applicability date. This section applies to transactions occurring after October 31,
2006.
