FinCEN Calls Attention to Online Child Sexual Exploitation Crimes

The Financial Crimes Enforcement Network issued Notice FIN-2021-NTC3 to call attention to an increase in online child sexual exploitation (OCSE). The notice provides financial institutions with specific suspicious activity report (SAR) filing instructions and highlights some financial trends related to OSCE.

FinCEN observed that OCSE offenders are increasingly using convertible virtual currency, peer-to-peer mobile applications, the darknet, and anonymization and encryption services to avoid detection.

Special SAR Filing Instructions

SARs, in conjunction with effective implementation of other BSA requirements, are crucial to identify and stop cybercrimes, including OCSE. Financial institutions should provide all pertinent and available information in the SAR narrative and attachments.

  • FinCEN requests that financial institutions reference only this notice in SAR field 2 (Filing Institution Note to FinCEN) using the keyword “OCSE-FIN-2021-NTC3”; this keyword should also be referenced in the narrative to indicate a connection between the suspicious activity being reported and the activities highlighted in this notice. Financial institutions may highlight additional advisory keywords in the narrative, if applicable.
  • Financial institutions should also select SAR Field 38(z) (Other) as the associated suspicious activity type to indicate a connection between the suspicious activity reported and OCSE activity and include the term “OCSE” in the text box. If known, enter the subject’s internet-based contact with the financial institution in SAR Field 43 (IP Address and Date).
  • If human trafficking or human smuggling are suspected in addition to OCSE activity, financial institutions should also select SAR Field 38(h) (Human Trafficking) or SAR Field 38(g) (Human Smuggling), respectively.
  • When describing suspicious activity, FinCEN asks reporting entities to use the terms and definitions that are provided in the appendix to the Notice.

Question of the Week

Q. Can a credit union open a share account for someone who only has an ITIN and not a Social Security number?

A. Yes. The NCUA encourages credit unions to serve individuals who are within the field of membership regardless of citizenship and regardless of whether they have a Social Security number or not.

An ITIN (Individual Taxpayer Identification Number) is a tax processing number issued by the Internal Revenue Service (IRS). It is a nine-digit number that always begins with the number 9, for example 9XX-XX-XXXX. The IRS issues ITINs to individuals who are required to have a U.S. taxpayer identification number but who do not have and are not eligible to obtain a Social Security Number (SSN) from the Social Security Administration (SSA).

ITINs are issued regardless of immigration status because both resident and nonresident aliens may have U.S. tax returns and payment responsibilities under the Internal Revenue Code. Individuals must have a filing requirement and file a valid federal income tax return to receive an ITIN unless they meet an exception.

Once this person has completed the application process using an ITIN, he or she is entitled to all the services and products available to all other members.

While an ITIN may serve as an ID number, it is important to obtain other verification documents as part of the credit union’s due diligence process, as ITINs are not valid identification outside the tax system.

ITINs expire if they are not used at least once in a three-year period.

Related Links

Individual Taxpayer Identification Number (IRS)
ITIN Expiration Frequently Asked Questions (IRS)
Fact Sheet – Expiring ITINs

Compliance Alerts

National Credit Union Administration

NCUA Proposed Rule Amending Subordinated Debt Rule: The NCUA released a proposed rule to amend the Subordinated Debt Rule. The proposal would amend the definition of “Grandfathered Secondary Capital” to include any secondary capital issued by the United States Government or one of its subdivisions.

Board Adds Additional Items to 2021 Agenda: The NCUA board approved additional items to be added to the 2021 agenda. These include expanding permissible activities of CUSOs, FOM requirements for shared facilities, and Mortgage servicing rights for Federal credit unions.

NCUA Board Approves Updated Oregon MBL Rule: The NCUA Board approved the request from the Oregon Department of Consumer and Business Services on revisions to Oregon’s Member Business Rule.

Navigating and Understanding the End of Pandemic-Era Homeowner Protection Programs: The NCUA published Letter to Credit Unions 21-CU-09 which provides credit unions with insight into the next steps credit unions should take as the various COVID-19 homeownership protection programs end.

Consumer Financial Protection Bureau

Consumer Complaint Research Brief: Consumer complaints throughout the credit live cycle, by demographic characteristics: The CFPB released a Consumer Complaint Research Brief which analyzes the racial and socioeconomic diversity of consumer complaints.

Financial Crimes Enforcement Network

FinCEN Calls Attention to Online Child Sexual Exploitation CrimesFinCEN issued Notice FIN-2021-NTC3 to call attention to an increase in online child sexual exploitation (OSCA). The Notice provides financial institutions with specific SAR filing instructions and highlights some financial trends related to OSCE.

Office of Foreign Assets Control

OFAC has updated the SDN list as of Sept. 22. The last update prior to this was Sept. 16.

Questions? Contact the Compliance Hotline: 1.800.546.4465; compliance@nwcua.org.

Posted in Compliance, Compliance News, Compliance Question.