FinCEN Clarifies How Banks Can Share Data on Suspicious Transactions
The U.S.’s anti-money-laundering watchdog released new guidance Thursday on how financial institutions can share personally identifiable information about their customers if they believe it is tied to a suspicious transaction.
The guidance is meant to help clarify the limits to what officials have called a key tool in identifying potential instances of money laundering and terrorist financing, said Kenneth Blanco, the director of Treasury’s Financial Crimes Enforcement Network, during a conference Thursday on financial crime enforcement.
Banks in the U.S. were given the legal authority to share certain types of information with each other, regulators and law-enforcement authorities, by legislation passed in the aftermath of the 9/11 terrorist attacks.
The law, the 2001 Patriot Act, has encouraged some financial institutions to band together in recent years to more effectively identify suspicious transactions that could be tied to an illicit activity affecting U.S. national security.
Still, questions have lingered in the private sector on the legal limits to such information-sharing partnerships, causing them to be under-utilized, according to practitioners.
Mr. Blanco said he hoped the guidance, released in the form of a fact sheet, would put some of the questions around the private sector partnerships to rest and encourage more banks to participate.
“Many have been calling for clarity in this area for a long time,” Mr. Blanco said during a speech at the conference, which was hosted by the American Bankers Association and the American Bar Association. “I myself have been very vocal in getting clarity in this area.”
The Patriot Act allows information-sharing when banks specifically suspect a transaction is tied to money laundering or terrorist financing. What’s been less clear is whether it is legal for banks to share information when they suspect a transaction is related to other types of crimes.
FinCEN’s latest guidance encourages financial institutions to take a liberal view of the statute.
Banks can share information about other types of crimes when they suspect they may be tied in some way to terrorist acts or money laundering, according to the latest guidance. But they don’t need to conclusively determine that an activity is suspicious to share information.
“This clarification is significant and addresses some uncertainty with sharing incidents involving possible fraud, cybercrime and other serious predicate offenses when financial institutions suspect those offenses may involve terrorist acts or money-laundering activities,” Mr. Blanco said.
Banks in the U.S. were given the legal authority to share certain types of information with each other, regulators and law-enforcement authorities, by legislation passed in the aftermath of the 9/11 terrorist attacks.
The law, the 2001 Patriot Act, has encouraged some financial institutions to band together in recent years to more effectively identify suspicious transactions that could be tied to an illicit activity affecting U.S. national security.
Still, questions have lingered in the private sector on the legal limits to such information-sharing partnerships, causing them to be under-utilized, according to practitioners.
Mr. Blanco said he hoped the guidance, released in the form of a fact sheet, would put some of the questions around the private sector partnerships to rest and encourage more banks to participate.
“Many have been calling for clarity in this area for a long time,” Mr. Blanco said during a speech at the conference, which was hosted by the American Bankers Association and the American Bar Association. “I myself have been very vocal in getting clarity in this area.”
The Patriot Act allows information-sharing when banks specifically suspect a transaction is tied to money laundering or terrorist financing. What’s been less clear is whether it is legal for banks to share information when they suspect a transaction is related to other types of crimes.
FinCEN’s latest guidance encourages financial institutions to take a liberal view of the statute.
Banks can share information about other types of crimes when they suspect they may be tied in some way to terrorist acts or money laundering, according to the latest guidance. But they don’t need to conclusively determine that an activity is suspicious to share information.
“This clarification is significant and addresses some uncertainty with sharing incidents involving possible fraud, cybercrime and other serious predicate offenses when financial institutions suspect those offenses may involve terrorist acts or money-laundering activities,” Mr. Blanco said.
