Information sharing is an ongoing anti-money laundering and counter-financing of terrorism (AML/CFT) priority for regulators and financial institutions worldwide. It remains a highly effective, yet often overlooked, tool in identifying and reporting AML/CFT activity. As credit unions and other associated financial institutions, we are encouraged to participate. It is worth revisiting information sharing as outlined in section 314(b) of the US PATRIOT Act and guidelines released by the Financial Crimes Enforcement Network (FinCEN).
What is section 314(b) of the USA PATRIOT Act?
Section 314(b) of the USA PATRIOT Act allows for the voluntary information sharing among financial institutions, congruent with protections from civil liability under a safe harbor, to aid in the detecting and reporting of activities that may involve money laundering or terrorism. Eligibility to participate is not limited to credit unions and includes casinos, money service businesses, brokers or dealers of securities, insurance companies, and others that are subject to anti-money laundering regulations under FinCEN.
Why should you participate?
Your participation in information sharing does the following:
What information should you share?
A credit union may share information about suspected money laundering or terrorist financing even if the credit union cannot directly tie the activity to proceeds of a “specified unlawful activity” (SUAs).
Furthermore, a credit union may share information that could involve possible terrorist activity or money laundering even if such activities do not constitute a “transaction” but are simply “attempts” to engage in transactions suspected of money laundering or terrorist activity.
FinCEN provides further details on SUAs and covered information in the available “Section 314(b) Fact Sheet” released in December 2020. The December 2020 Fact Sheet replaced the November 2016 version and rescinded the 2009 guidance (FIN-2009-G002) and 2012 administrative ruling (FIN-2012-R006).
As I mentioned previously, Section 314(b) of the USA PATRIOT Act allows for the voluntary information sharing among financial institutions, congruent with protections from civil liability under a safe harbor.
To receive safe harbor protection, credit unions must follow conditions for 314(b) participation:
1. Submit a registration to FinCEN.
A credit union can submit an online registration with FinCEN and should designate point-of-contact(s) for receiving and providing information. Participants will receive an acknowledgement from FinCEN, which is effective for one year.
2. Share information with other 314(b) participants.
Search the 314(b) participant list or download the list from FinCEN’s Secure Information Sharing System (SISS). FinCEN updates the list in real time.
3. Safeguard shared information and use only for AML/CFT purposes
Establish procedures to protect the security and confidentiality of 314(b) information shared or received. Section 314(b) does not authorize a credit union to share a SAR, nor does it permit the disclosure of the existence or nonexistence of a SAR. A credit union may use information obtained under section 314(b) to determine whether to file a SAR, but the intention to prepare or file a SAR cannot be shared. To note, there is the exception if financial institutions are filing a joint SAR.
For more comprehensive guidance on information sharing, below are two helpful resources:
The most recent development in information sharing is the Anti-Money Laundering Act of 2020, which expands information sharing into a global landscape. Check out this prior article discussing the future of information sharing in AML.