FinCEN Child Sexual Exploitation

On Sep. 16, FinCEN issued guidance alerting firms of crime, reporting.

  • FinCEN issued notice to call attention to online child sexual exploitation crimes (OCSE).
  • The notice provides financial institutions with specific suspicious activity report (SAR) filing instructions, as well as highlights some financial trends related to OCSE.
  • Background on OCSE
  • Crimes related to OCSE, including the funding, production, and distribution of child sexual abuse materials (CSAM), have increased during the COVID-19 pandemic.
  • Another trend is the rise in sextortion of minors, who are coerced or exploited into exchanging sexual images via the internet, mobile devices, social media platforms.
  • OCSE offenders often groom minors to share or post content online for money.
  • OCSE Trends Gleaned from SARs
  • FinCEN performed a review of OCSE-related SARs and observed certain trends.
  • Including that between 2017 and 2020, there was a 147 percent increase in OCSE-related SAR filings, including a 17 percent year-over-year increase in 2020.
  • Also, OCSE offenders are increasingly using convertible virtual currency (CVC) , peer-to-peer mobile apps, darknet, anonymization/encryption services to avoid detection.
  • CVC in payment method of choice for OCSE offenders to pay websites that host CSAM.
  • FinCEN found that OCSE facilitators attempt to conceal their illicit file sharing and streaming activities by transferring funds via third-party payment processors.
  • Suspicious Activity Reporting
  • SAR reporting, in conjunction with effective Bank Secrecy Act program, is crucial to identifying and stopping cybercrime, including online child sexual exploitation crimes.
  • Financial institutions should provide all pertinent information in the SAR that they file.
  • 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 activities highlighted in this notice.
  • Also select SAR Field 38(z) (Other) as the associated suspicious activity type.
  • By selecting SAR Filed 38(z), the institution indicates a connection between suspicious activity reported and OCSE activity; also include the term “OCSE” in the text box.
  • If known, enter the subject’s internet based contact with institution in SAR Field 43.
  • If human trafficking/smuggling are suspected in addition to OCSE activity, institutions should select SAR Field 38(h) (Human Trafficking) or Field 38(g) (Human Smuggling).
  • FinCEN asks that reporting entities use the Child Sexual Exploitation (CSE) terms and definitions in the appendix to the notice when describing suspicious activity in SARs.

Regulators FinCEN
Entity Types B/D; Bank; MSB; Thrift
Reference Nt, FIN-2021-NTC3, 9/16/2021;
Functions AML; Compliance; Reporting
Countries United States of America
Products Banking; Cryptocurrency; Payments
Regions Am
Rule Type Guidance
Rule Date 9/16/2021
Effective Date 9/16/2021
Rule Id 116040
Linked to N/A
Reg. Last Update 9/16/2021
Report Section AML & Enforcement

Last substantive update on 09/17/2021