On December 10, the Financial Crimes Enforcement Network (FinCEN) issued new guidance interpreting section 314(b) of the USA PATRIOT Act and rescinding FinCEN’s previous guidance. Section 314(b) is intended to establish a safe harbor for financial institutions that voluntarily share (in accordance with the statute’s terms) information regarding possible terrorism and money laundering. The new guidance, which is in the form of a Fact Sheet, appears aimed at providing further encouragement and assurance to financial institutions to participate in section 314(b).
FinCEN Director Kenneth Blanco introduced the guidance in a speech to the Financial Crimes Enforcement Conference of the American Bar Association and American Bankers Association. Director Blanco explained that the guidance was the outcome of feedback from financial institutions on the effectiveness of previous section 314(b) guidance. He also highlighted FinCEN efforts during the COVID-19 pandemic and recent FinCEN rulemakings in the speech.
Most notably, the guidance clarifies the circumstances under which financial institutions may share information under section 314(b), including when the financial institution does not have specific information that the suspicious activity relates to a specified unlawful activity (SUA) or includes proceeds from an SUA.
The guidance also provides that financial institutions can share information not only about a “transaction,” but also about certain attempted transactions, attempted inducements of others to transact, and other predicate offenses. In his speech, Director Blanco explained that “this clarification is significant and addresses some uncertainty with sharing incidents involving possible fraud, cybercrime, and other predicate offenses when financial institutions suspect those offenses may involve terrorist acts or money laundering activities.”
The Fact Sheet also clarifies the types of associations that can facilitate information sharing under section 314(b). The guidance provides that entities which are not “financial institutions” under the Bank Secrecy Act may nonetheless form and operate associations of financial institutions that share information under section 314(b). Thus, unincorporated associations of financial institutions and compliance service providers to financial institutions that operate associations may share information under section 314(b), even though they themselves are not “financial institutions.”
In his speech, Director Blanco said that the new guidance was intended to “enhanc[e] participation and utility of the 314(b) program” and “mak[e] good on a commitment” to make the fight against terrorism and money laundering “more effective and efficient.”