Sec. 314. Cooperative Efforts To Deter Money Laundering
In order to foster improved communication between financial institutions, the regulators of the financial institutions and law enforcement authorities the U.S. Treasury secretary was directed to create regulations within 120 days after the enactment of the Patriot Act that set out how information was to be shared. The aim of the act was more to encourage law enforcement authorities and financial regulation agencies to share the information they had on foreign individuals or organisations engaged in terrorism. Due to the complex nature of the task on February 26, 2002 the U.S. Treasury initially put together a proposed rule to amend the Code of Federal Regulations, and then on March 14, 2002 they released 31 CFR 103.100 which was entitled "Special Information Sharing Procedures To Deter Money Laundering and Terrorist Activity".
The regulation allows FinCEN to solicit, on behalf of a Federal law enforcement agency, information from a financial institution or group of financial institutions. In order to gain such information, a law enforcement agency must provide a certificate which shows who is the target of the information request — the regulation states that enough information must be provided to the institution to allow them to distinguish between common or similar names — and a contact person from the agency who knows about the request. The financial institution must then expeditiously search records for information that satisfies the request, though at any time the institution can contact the law enforcement agency to clarify the scope or terms of the request. The information that an agency must disclose is:
- any current amounts held for a named suspect
- any account maintained by the suspect during the previous 12 months
- any transaction conducted by or on behalf of a suspected, or any transfer of funds where the suspect was the recipient or the giver of the funds
After identifying the account asked for by FinCEN, the financial institution must provide a report back to FinCEN with:
- the name of the suspect
- the number of accounts owned, or transaction made
- the social security number, taxpayer ID number, passport number, date of birth, address or any other identity information provided by the suspect to the financial institution when they opened their account or performed their transaction
The regulation specifically prohibits the financial institution from using information provided by FinCEN to do anything other than report information back to FinCEN, make a determination whether to do business with the named suspect or suspects, or to help them comply with an order given under the regulation. Furthermore, the financial institution may not disclose that FinCEN made a request for or obtained information to anyone other than FinCEN or to the Federal agency who was using FinCEN to gather information about the suspects. Under the regulation, financial institutions are expected to maintain appropriate security to keep such information confidential in order to satisfy the Gramm-Leach-Bliley Act.
The section also allows financial institutions to share information with other financial institutions when so allowed by the Secretary of Treasury, and they are now legally immune from prosecution if they gather or share information relating to terrorism or financial money-laundering in order to identify and report such activities. The section also gives immunity against breaches of the Gramm-Leach-Bliley Act to any organisation who undertakes actions to comply with this section.
Finally, the section directs the Secretary of Treasury to produce a report semiannually to the financial services industry "containing a detailed analysis identifying patterns of suspicious activity and other investigative insights derived from suspicious activity reports and investigations conducted by Federal, State, and local law enforcement agencies". This report must be distributed to every financial institution in the United States.
Read more about this topic: USA PATRIOT Act, Title III, Subtitle A
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