Financial Crimes Enforcement Network (U.S. Patriot Act 314(b))

Posted by Shannon Walker

on November 23, 2013

graphic financial crimes enforcement network logoSection 314(b) of the US Patriot Act provides financial institutions with the ability to share information with one another, under a safe harbor that offers protections from liability, in order to better identify and report potential money laundering or terrorist activities. 314(b) information sharing is a voluntary program,
and FinCEN strongly encourages information sharing through Section 314(b).

While information sharing under the 314(b) program is voluntary, it can help financial institutions enhance compliance with their anti-money laundering/counter-terrorist financing (AML/CFT) requirements, most notably with respect to:

  • Gathering additional and potentially invaluable information on customers or transactions potentially related to money laundering or terrorist financing,
    including previously unknown accounts, activities, and/or associated entities or individuals.
  • Shedding more comprehensive light upon overall financial trails, especially if they are complex and appear to be layered amongst numerous financial institutions, entities, and jurisdictions.
  • Building a more comprehensive and accurate picture of a customer’s activities where potential money laundering or terrorist financing is suspected, allowing for more precise decision-making in due diligence and transaction monitoring.
  • Alerting the contacted financial institution to customers about whose suspicious activities it may not have been previously aware.
  • Facilitating the filing of more comprehensive and complete Suspicious Activity Reports (SARs) than would otherwise be filed in the absence of 314(b) information sharing.
  • Aiding in identifying and collectively stemming money laundering and terrorist financing methods and schemes
  • Financial institutions subject to an anti-money laundering program requirement under FinCEN regulations, and any association of such financial institutions, are eligible to share information under Section 314(b). This currently includes the following types of financial institutions:
    • Banks
    • Casinos and Card Clubs
    • Money Services 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 Jewels
    • Operators of Credit Card Systems
    • Loan or Finance Companies
    • Associations consisting of the financial institutions listed above

Under 314(b), financial institutions or associations of financial institutions may share information with each other regarding individuals, entities, organizations, and countries for purposes of identifying, and, where appropriate, reporting activities that may involve possible terrorist activity or money laundering.

FinCEN has issued guidance clarifying that, if 314(b) sharing participants suspect that transactions may involve the proceeds of specified unlawful activities under money laundering statutes, information related to such transactions can be shared under protection of the 314(b) safe harbor.

In cases where a financial institution files a SAR that has benefited from 314(b) information sharing, FinCEN encourages financial institutions to note this in the narrative in order for FinCEN to identify and communicate additional examples of the benefits of the 314(b) program. Please note, however, that while information may be shared related to possible terrorist financing or money laundering that resulted in, or may result in, the filing of a SAR, Section 314(b) does not authorize a participating financial institution to share a SAR itself or to
disclose the existence of a SAR.

While FinCEN encourages 314(b) information sharing due to the many benefits of the program, financial institutions may voluntarily choose whether or not to participate. FinCEN regulations (31 CFR 1010.540) set forth the requirements that must be satisfied in order to benefit from 314(b) safe harbor protection, as outlined below. Sharing information without satisfying these conditions does not by itself subject an institution to penalty under FinCEN regulations, since 314(b) participation is voluntary; however, a financial institution will only benefit from the safe harbor protection if it follows the conditions for participation in the program. Further details available at http://www.fincen.gov/