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Financial institutions can share information to prevent financial crimes

Apr 26, 2021

Sharing critical details with another financial institution can be very important to identifying and preventing financial crimes; however, many shy away from sharing information in fear of violating confidentiality rules. 

However, USA PATRIOT Act Section 314(b) allows financial institutions to share information when needed to understand complex transactions, complete an investigation or create awareness for any other involved financial institutions.

It also allows financial institutions to share knowledge of a customer's suspicious activity related to terrorist financing and money laundering.

In December 2020, FinCEN released a 314(b) fact sheet that encourages financial institutions to voluntarily share information with other participating financial institutions. The fact sheet describes the benefits of sharing information, including:

  • Gaining a better understanding of complex financial activity
  • Seeing a better view of the customer's trail of layered transactions
  • Creating awareness for the other involved financial institutions
  • Preparing a more comprehensive SAR narrative to aid law enforcement

In addition, the regulatory agencies strongly recommend financial institutions dealing with marijuana- and other cannabis-related businesses share information since these entities are at high-risk for potential money laundering.  

To share information through FinCEN’s secure channel, the financial institution must register annually through its website. Each financial institutions should also have documented procedures in place to ensure compliance. In the event of an information request, each respective financial institution must verify that the other is signed up to share information as well through FinCEN 314(b) participant list.

Not only can information sharing make a difference for financial institutions that may not have all the information to see the big picture, but valuable information can be obtained as well. FinCEN provides a safe harbor for any information shared between participating financial institutions. While any indication that a SAR has been filed is strictly prohibited, the insight another FI can provide is extremely valuable in identifying and investigating illegal activity. 

It is recommended to focus the 314(b) inquiry on the suspicious activity and not whether a SAR has been filed. Only financial institutions that are registered to participate in 314(b) information sharing can file a joint SAR with another financial institution, in which case the discussion of jointly filing a SAR can be disclosed between themselves.

FinCEN’s information sharing tool isn’t used widely enough, particularly among smaller financial institutions. Yet sharing information with another participating financial institution could unlock the details of all suspicious activity to thwart money laundering or terrorist financing.

Author(s)

Stephanie Jennings, CRCM, CCBTO
Manager
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