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Question:

What is Information Sharing under Section 314(b) of the USA PATRIOT Act and why is it important?

Answer:

Section 314(b) of the USA PATRIOT Act permits, but does not require, financial institutions (including residential mortgage loan originators subject to the Bank Secrecy Act) to share information with one another in order to better identify and report potential money laundering or terrorist financing. FinCEN previously advised that information sharing is critical to identifying, reporting, and preventing financial crime. As such, FinCEN strongly encourages financial institutions to participate in its voluntary Section 314(b) information sharing program.

FinCEN previously published a 314(b) Fact Sheet. The Fact Sheet outlines some of the benefits of information sharing, which include, but are not limited to, helping a financial institution enhance its compliance with anti-money laundering (AML) requirements by alerting other participating financial institutions to customers of whose suspicious activities they may not have been previously aware and facilitating efficient SAR reporting decisions by obtaining a more complete picture of potential suspicious activity.

The Fact Sheet also provides important clarifications, including explaining that a financial institution may share information relating to activities that it suspects may involve possible terrorist financing or money laundering. A financial institution does not need to have concluded that the activity is suspicious, not does the financial institution need to have specific information that the activity directly relates to proceeds of a specified unlawful activity. Further, a financial institution may share information even if the activities do not constitute a “transaction.”  This can include an attempted transaction, or an attempt to induce others to engage in a transaction.  This allows financial institutions to avail themselves of Section 314(b) information sharing to address incidents of fraud or cybercrime. 

There is no limitation under Section 314(b) on the sharing of personally identifiable information or the type or medium of information shared provided it is only shared for the purpose of:

• Identifying and, where appropriate, reporting on activities that may involve terrorist financing or money laundering;
• Determining whether to establish or maintain an account, or to engage in a transaction; or
• Assisting in compliance with AML requirements.

It is important to note that section 314(b) does not authorize a financial institution to share a SAR or to disclose the existence or nonexistence of a SAR. If a financial institution shares information under section 314(b) about the subject of a prepared or filed SAR, the information shared should be limited to underlying transaction and customer information.

To participate in information sharing under Section 314(b), a financial institution must follow certain procedures as outlined in the Fact Sheet.