On June 16, 2009, the Financial Crimes Enforcement Network (“FinCEN”) issued interpretative guidance to clarify the scope of permissible information sharing covered by the safe harbor protection of Section 314(b) of the USA PATRIOT Act (the “Guidance”).1 The Guidance clarified that a financial institution that complies with the requirements of Section 314(b) may share information relating to transactions that a financial institution suspects may involve the proceeds of one or more specified unlawful activities (“SUAs”), as defined under the federal money laundering statutes and remain within the protection of the Section 314(b) safe harbor.
Section 314(b) provides a safe harbor from liability for a financial institution or an association of financial institutions2 that voluntarily chooses to share certain information with other financial institutions for certain delineated purposes. To avail itself of the safe harbor, a financial institution must comply with the requirements of Section 314(b), including submitting to FinCEN a notice of the intent to share information, taking reasonable steps to verify that the other financial institution has also submitted the requisite notice to FinCEN, and restricting the use and security of the information shared.
Pursuant to Section 314(b), the type of information that may be shared under the protection of the safe harbor is information “regarding individuals, entities, organizations, and countries for purposes of identifying and, where appropriate, reporting activities that the financial institution or association suspects may involve possible terrorist activity or money laundering.”3 The Guidance clarified that information relating to transactions that may involve the proceeds of one or more SUAs is included within the type of information that may be shared under the protection of the safe harbor of Section 314(b).
The federal money laundering statutes, codified at 18 U.S.C. §§ 1956-57, define SUAs to include a wide range of offenses, including mail and wire fraud, bank related offenses, drug-related offenses, and certain foreign crimes.4 FinCEN expressly noted in the mortgage fraud context that the definition of SUAs includes offenses relating to fraudulent Federal credit entries, Federal Deposit Insurance transactions, bank entries, and loan or credit applications.5
Section 314(b) also provides that shared information may be used in the following three circumstances: (i) to identify and, where appropriate, report on money laundering or terrorist activities; (ii) to determine whether to establish or maintain an account, or to engage in a transaction; or (iii) to assist the financial institution in complying with any requirement of 31 CFR part 103, including, for example, using the shared information to help establish and maintain a required anti-money laundering program.6 The Guidance expressly notes that information shared relating to the proceeds of one or more SUAs may be shared for the first described purpose, i.e., “to identify and report activities that the financial institution ‘suspects may involve possible terrorist activity or money laundering.’” (emphasis in original).7
Lastly, FinCEN cautions that, given the confidentiality provision prohibiting financial institutions from disclosing a suspicious activity report (“SAR”), when sharing information relating to possible money laundering or terrorist activity under section 314(b), a financial institution may not disclose a SAR or reveal its existence, but may share the information underlying a SAR.8