Associate Member TO SHARE OR NOT The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act (USA PATRIOT Act) was passed in October 2001 in response to the terrorist acts of September 11. The purpose of the USA PATRIOT Act is to deter and punish terrorist acts in the United States and around the world, to enhance law enforcement investigatory tools, and other purposes. Section 314(b) of the Act encourages financial institutions and associations to share information on individuals, entities, organizations, and countries suspected of engaging in possible terrorist activity or money laundering. “Financial institution” is any institution required to establish and maintain an anti-money laundering (AML) program, including banks, thrifts, and credit unions regulated by the federal banking agencies. Section 314(b) also provides a safe harbor from civil liability to financial institutions that appropriately share information within the limitations and requirements specified by the Financial Crimes Enforcement Network (FinCEN) in its implementing regulation [31 CFR 1010.540]. Information subject to the sharing rules includes all forms of “money laundering” and “terrorist financing.” FinCEN guidance has made clear that “money laundering” encompasses a wide range of activities defined as specified unlawful activities (SUA) under 18 USC 1956 and 1957. Some of these SUA directly impact financial institutions, such as a number of types of fraud, including those related to banking transactions, loan and credit applications, and bank entries. Benefits of information sharing Sharing information about suspected money laundering or fraud can have several benefits for the parties to the information exchange, as well as to law enforcement and the financial industry in general. Sharing information: • Allows financial firms to significantly expand their information for assessing potential suspicious activity or accounts (e.g., previously unknown accounts, activities, and/or associated entities or individuals) without increased risk. Information received may provide details the requesting institution may not have had, such as the source of a customer’s funds. • Helps the institution receiving information by helping the decision whether to close an existing account or decline opening a new account. • Allows a financial institution to alert other financial institutions about a customer by proactively using the 314(b) process to share information about which the other institutions might not otherwise have been aware. • Allows participating institutions to build a more comprehensive and accurate picture of a customer’s activities that may involve money laundering by shedding more light on overall financial trails (especially when they are complex and may be layered among a number of financial institutions, jurisdictions, etc.), and allow better decision making in due diligence and transaction monitoring. • Benefits law enforcement when the information sharing results in filing one or more Suspicious Activity Report(s), particularly since SARs with information derived from more cbak.com 8 In Touch
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