Money launderers deploy a host of tactics to throw AML specialists off the trail, from investing in businesses and real estate to using a complex array of financial instruments. Often, they move money between multiple institutions or multiple accounts to obscure suspicious behavior and avoid the consequence of getting caught.
In the constant fight to protect your institution and its clientele, remember that you’re not alone. Section 314(b) under the USA PATRIOT Act paved the way for institutions to share information under a safe harbor that offers protections from civil liability. Considering FinCEN Director Kenneth Blanco’s recent remarks and a broadening of the provision, Section 314(b), a tool to better identify and report potential money laundering and terrorist funding, is worth revisiting.
Here’s a quick refresher, followed by an overview of the updates and reasons you should register if you haven’t already.
FinCEN 314(b) in a Nutshell
Section 314(b) established a communication channel between financial institutions to investigate suspicious or unlawful transaction activity. For example, suppose an institution suspects a money laundering attempt, or terrorist financing. Under 314(b), they can contact another financial institution in the money trail to share that information. In that case, they could identify a clear contact at the other institution to have those discussions and determine next steps.
What’s Changed: In addition to rescinding guidance (FIN-2009-G002) and (FIN-2012-R006), which established the initial scope of 314(b), the December 2020 update strengthens the provision by broadening the safe harbor and applicable sharable information.
- Information Sharing: While the sharable suspicious activity may involve a specified unlawful activity (SUA) or even be submitted in a suspicious activity report (SAR), institutions do not need a conclusive determination to benefit from the safe harbor. Nor must the activities in question constitute a “transaction.” Instead, information sharing requires a reasonable basis to believe that the information shared supports AML/CFT.
- A Wider Network: Eligible participants in the program extend beyond entities classified as a financial institution under the BSA, and include money services businesses, insurance companies, compliance service providers and more.
FinCEN’s 314(b) Fact Sheet enumerates eligible participants and examples of shareable information. Although participation in Section 314(b) is voluntary, it bolsters institutions’ AML program by facilitating quick and efficient collaboration.
Why You Should Register for 314(b) Information Sharing
Combating organized crime and global terrorism requires constant vigilance. This quick communication program supports your anti money laundering efforts and could potentially save your institution thousands of dollars each time you catch a suspicious transaction. Plus, the communication line works both ways and allows other organizations to reach out and notify you of potential problems and risk factors.
The key to stopping suspicious transactions is speed. A financial institution not registered for the safe harbor of section 314(b) risks not catching the activity in time. By joining the broadened 314(b) network, you can communicate quickly to address suspicious activity. Without this registration, if your institution tries to contact an institution or other organization to stop the transaction, it can be challenging to get in touch with the right person.
FinCEN’s Fact Sheet further enumerates the benefits. Registering for the information-sharing program makes it easier for you to:
- Gain a more holistic view: By working with the network, you gain a better perspective of activities potentially related to money laundering or terrorist financing. Knowledge of previously unknown accounts and activities enables due diligence and precise decision making. Also, money launderers can less effectively conceal the source of their money with multiple accounts and transactions or exploit bookkeeping tricks.
- Work with other institutions to aid AML/CFT: Your financial institution can generally see only one side of the transaction. Information sharing makes it easier for institutions to remain vigilant.
- Strengthen Suspicious Activity Reports: With access to a broader array of account, transaction, identity and other information pertinent to AML/CFT, you can file more comprehensive SARs and make efficient reporting decisions.
You’re Not Alone in the AML/CFT Fight
314(b) is a simple way to help protect your institution and account holders from falling victim to suspicious activity. Registration is free and takes as few as 24 to 48 hours. While not required, institutions should consider registering at least one employee to access the safe harbor.
Once you register for FinCEN’s Secure Information Sharing System (SISS), you can access the FinCEN 314(b) participants list. From there, FinCEN recommends you “safeguard shared info and use only for AML/CFT purposes, for instance identifying whether to report something, determining whether to establish or maintain an account, engage in a transaction, etcetera.”
So remember, you’re not alone. In conjunction with a robust AML program, 314(b) can ensure criminals have nowhere to hide. Check out our BSA/AML White Paper for additional insight regarding the changing AML landscape.