Tuesday, December 22, 2020
On December 10, 2020, the U.S. Division of the Treasury’s Monetary Crimes Enforcement Community (“FinCEN”) issued a Reality Sheet clarifying the circumstances beneath which monetary establishments can share info beneath Part 314(b) of the USA Patriot Act (“Part 314(b)”), 31 C.F.R. § 1010.540. In a speech on the identical day, FinCEN’s director, Kenneth Blanco, urged monetary establishments to make the most of this system.
Part 314(b) is a secure harbor provision that protects monetary establishments from legal responsibility when disclosing buyer info to different monetary establishments with a view to flag attainable cash laundering or terrorist actions. Monetary establishments can use this system to collect details about prospects with flagged exercise, together with accounts held away from the establishment, actions, and related entities or people. Whereas broadly utilized, this system has usually been criticized for failing to make clear at what level a monetary establishment might share the requested info – both when the establishment turned conscious of surprising exercise or solely after figuring out a suspicious act was unlawful.
Blanco defined that the Reality Sheet was issued to deal with this ambiguity within the Part 314(b) program. The Reality Sheet explains that info sharing is permissible beneath this system if the monetary establishment suspects that the topic exercise, buyer, or account is tied indirectly to terrorist acts or cash laundering. In different phrases, the establishment doesn’t have to conclusively decide that an exercise is suspicious to share info. Accordingly, monetary establishments might share info regarding attainable fraud, cybercrime, different predicate offenses, and even tried transactions.
However the encouragement, the Reality Sheet reiterates that sure circumstances have to be glad earlier than an establishment can share info beneath Part 314(b). Monetary establishments and associations should set up and preserve procedures to safeguard the safety and confidentiality of the shared info. Additional, info could solely be shared beneath three circumstances: (1) to establish actions which will contain terrorist financing or cash laundering; (2) to find out whether or not to determine or preserve an account, or to have interaction in a transaction; or (3) to help compliance with anti-money laundering necessities. Lastly, whereas monetary establishments can work collectively to collectively file a brand new suspicious exercise report (“SAR”) with FinCEN, they can not share filed SARs beneath this system.
Monetary establishments taking part within the Part 314(b) program, and those who want to be part of, ought to revisit their insurance policies and procedures to make sure that info shared or obtained beneath this system is well-protected, incoming and outgoing info requests adjust to Part 314(b) circumstances. Whereas this system just isn’t obligatory, eligible and taking part establishments may wish to establish alternatives for extra energetic engagement within the Part 314(b) program.
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