FinCEN Compliance Policy for Foreign Operations

 

FinCEN Compliance Policy for Foreign Operations

Effective Date: 08/01/2025
Applicability: All employees, contractors, and third-party service providers

1. Policy Purpose

To ensure compliance with U.S. Financial Crimes Enforcement Network (FinCEN) regulations, even while operating outside the United States, given that:

  • The company provides financial services (tax filing, business formation, consulting).
  • It may process U.S.-linked transactions (e.g., serving U.S. clients, using U.S. banking intermediaries).
  • It must comply with global AML/CFT standards (FATF, local laws).

2. FinCEN Regulatory Obligations

Even as a foreign entity, Remote Business Services LLC must adhere to the following if it has a U.S. nexus:

A. Bank Secrecy Act (BSA) Requirements

  1. Suspicious Activity Reports (SARs)

    • File FinCEN Form 111 if:
      • A transaction involves $5,000+ and appears suspicious (e.g., money laundering, tax evasion).
      • A client is linked to sanctioned entities (OFAC) or PEPs (Politically Exposed Persons).
    • Deadline: Within 30 days of detecting suspicious activity.

  2. Currency Transaction Reports (CTRs)

    • If the company handles cash transactions ≥$10,000 (e.g., cash payments for tax services), file FinCEN Form 112.

  3. Foreign Bank Account Reporting (FBAR)

    • If the company holds foreign bank accounts with $10,000+ aggregate balance, file FinCEN Form 114 annually.

  4. Beneficial Ownership Reporting (BOI)

    • Under the Corporate Transparency Act (CTA), if the company is registered in the U.S. (e.g., as an LLC), it must report beneficial owners to FinCEN via BOI E-Filing.

B. Anti-Money Laundering (AML) Program

  • Required if:
    • The company qualifies as a Money Services Business (MSB) under FinCEN (e.g., currency exchange, money transmission).
    • It has U.S. operations, clients, or banking relationships.
  • 5-Pillar AML Program:
    1. Internal Policies & Procedures (this document).
    2. Designated Compliance Officer.
    3. Employee Training (annual AML/CFT training).
    4. Independent Testing (third-party audits).
    5. Risk-Based Customer Due Diligence (CDD).

3. Compliance Measures for Foreign Operations

A. Customer Identification Program (CIP)

  • Verify identity of U.S. clients per FinCEN’s Customer Due Diligence (CDD) Rule.
  • Enhanced Due Diligence (EDD) for:
    • High-risk clients (PEPs, offshore entities).
    • Transactions involving cryptocurrency or high-risk jurisdictions.

B. Recordkeeping & Reporting

  • Maintain records for 5 years, including:
    • KYC documents (passport, business licenses).
    • Transaction logs (invoices, payment confirmations).
  • File SARs/CTRs electronically via FinCEN’s BSA E-Filing System.

C. Sanctions Screening

  • Screen clients and transactions against:
    • OFAC Sanctions List (U.S.).
    • EU/UN Sanctions Lists (if operating in Europe).
  • Block transactions linked to sanctioned entities.

D. Foreign Bank Account Controls

  • If using non-U.S. banks, ensure they comply with:
    • FATCA (for U.S. tax reporting).
    • FATF AML/CFT standards.
  • Avoid banks in high-risk jurisdictions (FATF blacklist).

4. Penalties for Non-Compliance

  • Civil fines: Up to $500,000 per violation.
  • Criminal charges: Willful violations may lead to imprisonment.
  • Loss of banking relationships: U.S. banks may terminate services.

5. Training & Oversight

  • Annual FinCEN/BSA training for employees.
  • Quarterly audits to ensure compliance.
  • Designated Compliance Officer responsible for filings.

Implementation Notes

  • FinCEN’s rules apply extraterritorially if the company touches the U.S. financial system.
  • Consult U.S. legal counsel if uncertain about reporting obligations.
  • Use compliance software (e.g., Chainalysis for crypto, ComplyAdvantage for sanctions screening).

Next Steps:

  • Integrate this policy with the AML/CTF Program.
  • Draft a Beneficial Ownership Reporting (BOI) Procedure if registered in the U.S.

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