Elliot Berman
Information sharing in the BSA/AML space is a topic of ongoing discussion and such an essential tool. I wrote about the value and the challenges in a prior post. One part of the US information sharing regime is Patriot Act §314(b).[1] Since its passage, FinCEN has issued guidance about the section on a number of occasions; the most recent in December 2020 through the issuance of an updated Fact Sheet. Section 314(b) established a process for financial service companies[2] (FIs) to share certain information under the protections of a safe harbor from liability for privacy law violations or from sharing false information. Participation under §314(b) is voluntary.
What should you do if you want to share information under §314(b)?
To share information a FI needs to take a number of steps:
- Register with FinCEN
- Only share information with other registered FIs (FinCEN maintains a searchable list of the registered FIs)
- Maintain procedures to safeguard the confidentiality and security of shared information
- Only use the shared information for approved purposes.[3]
Why should you consider sharing information under §314(b)?
According to FinCEN, it provides an additional source of information during an investigation, alerts other participating FIs about suspicious activity they may not have or are unable to detect, supports more comprehensive Suspicious Activity Reports, and aids in the detection of money laundering and terrorist financing.
What information can be shared under §314(b)?
As noted in the Fact Sheet, FIs “may share information relating to activities that a financial institution…suspects may involve possible terrorist financing or money laundering.” This shared information can relate to specific transactions (or attempts to engage in transactions or to induce others to engage in transactions) using proceeds of specified unlawful activities (SUAs).[4] In the Fact Sheet, FinCEN makes clear that a FI doesn’t have to have clear information indicating the activity subject of the shared information is directly related to a SUA. It is enough that the FI has a “reasonable basis to believe the information shared related to activities that may involve money laundering or terrorist financing.” The safe harbor is available for shared information where the FI isn’t able to identify the transactions as proceeds of a SUA.
The form of the shared information is not limited by §314(b); it can be account records, video images, IP addresses or any other information which is shareable under the section.
What else should you know about the Fact Sheet?
It makes changes to several items of prior FinCEN guidance including:
- Replacing the Section 314(b) Fact Sheet issued in November 2016
- Rescinding the Guidance on the Scope of Permissible Information Sharing Covered by Section 314(b) Safe Harbor of the USA PATRIOT Act (June 16, 2009)
- Rescinding the Administrative Ruling Regarding the Participation of Associations of Financial Institutions in the 314(b) Program (July 25, 2012).
What should you take from this post?
This update benefits your FI to ensure participation in the §314(b) program. If your FI is not currently registered to participate, you should register now. Depending on your FI's status with the program, you should look to establish or review your §314(b) information sharing procedures, which should include consideration for staff training on the limited use of the information (for those who will have access to the information. If the training has not been given, or has not been renewed recently, update the training and deliver it.It would benefit you/your FI to subscribe to the FinCEN publications and watch for press releases and/or subscribe to the federal law enforcement agencies to get additional information about financial crime and money laundering investigations. The opportunity for collaboration between FIs is there - I encourage you to take full advantage of it.
[1] The USA Patriot Act, which stands for Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism, was passed in response to the terrorist attacks on September 11, 2001 and signed into law on October 26, 2001.
[2] FIs that may share information under §314(b) are those which are subject to an anti-money laundering program requirement. These currently include: banks (including savings banks and credit unions); casinos and card clubs; money service businesses; brokers or dealers in securities; mutual funds; insurance companies; futures commission merchants and introducing brokers in commodities dealers in precious metals, precious stones, or jewelers; operators of credit card systems; loan or finance companies; housing government sponsored enterprises; and associations consisting of FIs on this listed.
[3] Shared information may only be used to: identify or report on activities that may involve terrorist financing or money laundering; determine whether to establish or maintain an account or
[4] See 18 U.S.C. §1956, which lists the predicate crimes that apply to a money laundering offense.
Do you have questions on your FI's current use of the §314(b) program, or how to get started? Contact our team today for more details.