WASHINGTON — The Financial Crimes Enforcement Network (FinCEN) is encouraging greater use of a voluntary information-sharing program that allows financial institutions to exchange information about suspected money laundering, terrorist financing and related illicit activity while receiving protection from civil liability, according to agency guidance.
The guidance, outlined in FinCEN’s Section 314(b) Fact Sheet, explains how financial institutions can share information under a safe harbor established by the USA PATRIOT Act to help identify and report suspicious activity. FinCEN said the provision is intended to strengthen anti-money laundering and counter-terrorist financing efforts by allowing institutions to collaborate when they identify potentially illicit conduct.
Under Section 314(b), participating financial institutions may share information regarding activities they suspect may involve money laundering or terrorist financing after providing notice to FinCEN. The agency said institutions do not need definitive proof that an activity involves criminal proceeds or money laundering before sharing information and may exchange information when they have a reasonable basis to believe the activity could involve such conduct.
FinCEN said the safe harbor applies broadly and allows institutions to share information relating to activities that may involve money laundering or terrorist activity even when those activities do not constitute completed financial transactions. The agency noted that the provision can be used in cases involving fraud, cybercrime, attempted transactions and efforts to induce others to engage in suspicious conduct.
No Restriction on Sharing
The fact sheet also clarifies that there are no restrictions on the type of information that may be shared under the program, including personally identifiable information, provided the information-sharing is conducted for authorized purposes. Information may be shared through various means, including verbal communications, according to FinCEN.
To participate, financial institutions must file a notice with FinCEN and renew that notice annually. Institutions also must take reasonable steps to verify that another institution participating in an information exchange has likewise registered with FinCEN. The agency maintains a participant list to facilitate those verifications.
FinCEN emphasized that participation in the program is voluntary and that institutions must maintain procedures to safeguard the security and confidentiality of shared information. Information received through the program may be used only for purposes permitted under the Bank Secrecy Act and related anti-money laundering requirements.
Additional Clarification
The guidance also clarifies that associations of financial institutions may participate in information sharing. According to FinCEN, organizations that are not themselves financial institutions — such as compliance service providers — may form or operate associations whose financial institution members can exchange information under Section 314(b). Unincorporated associations also may qualify.
FinCEN said the information-sharing framework is designed to help financial institutions identify suspicious activity more effectively, make informed account and transaction decisions, and enhance compliance with anti-money laundering and counter-terrorist financing obligations. The agency has described Section 314(b) as one of the financial industry’s most important collaborative tools for detecting and reporting illicit financial activity.
