Disclaimer: The contents of this article are intended to provide a general understanding of the subject matter. However, this article is not intended to provide legal or other professional advice, and should not be relied on as such.
Compliance with Bank Secrecy Act/Anti-Money Laundering (BSA/AML) regulations requires the assessment, identification, and mitigation of money laundering and terrorist financing risk and includes the development of robust policies, procedures, and internal controls.
Ensuring that an organization’s BSA/AML compliance program is effective can present challenges for financial institutions (FIs) in the face of competing demands, limited resources, and profit quotas.
Nonetheless, to ensure that risks are adequately managed, specific areas of BSA/AML compliance continue to be a focus for regulators. One such area is Section 314(a) of the USA PATRIOT Act, also known as a FinCEN 314(a) Request.
What is Section 314(a)
The USA PATRIOT Act was passed by Congress following the September 11, 2001 terrorist attacks and is designed to help the U.S. government fight the funding of terrorism and money laundering activity through enhanced law enforcement investigatory tools and intelligence gathering.
Consistent with the overall aim of the USA PATRIOT Act, Section 314(a) outlines the regulatory requirements and procedures that financial institutions (FIs) must follow regarding the sharing of information with law enforcement and other government agencies for purposes of deterring money laundering and terrorist funding. These requirements are contained in 31 CFR § 1010.520.
Through Section 314(a), law enforcement can retrieve key information from FIs to help fight financial crime and protect national security. The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) is responsible for the coordination of information sharing and serves as the conduit between FIs and law enforcement regarding Section 314(a) Requests.
More specifically, the 314(a) regulations enable law enforcement (including federal, state, local, and even foreign agencies), through FinCEN, to reach out to designated points of contact at financial institutions to identify accounts and transactions of individuals and entities suspected to be involved in money laundering or terrorist financing.
Law enforcement has noted the effectiveness of the 314(a) process in its investigations, and according to FinCEN’s 314(a) Fact Sheet, as of October 3, 2023, the 314 Program Office at FinCEN processed 6,367 requests (including 784 cases related to terrorism/terrorist financing and 5,584 cases related to money laundering).
For additional information regarding compliance legislation, view our timeline of key BSA/AML regulations.
How Can FIs Comply with Section 314(a)?
Designation of a Point of Contact (POC)
Financial institutions should designate, via their primary federal supervisory agency, a point of contact (POC) for receiving, reviewing, and responding to Section 314(a) Requests from FinCEN. An institution may have up to four designated POCs, who are registered as such with FinCEN. Registration with FinCEN requires providing FinCEN with contact information for each designated POC, including name, title, mailing address, e-mail address, telephone number, and facsimile number. Institutions should also promptly update FinCEN of any changes to such designation or contact information.
Notification of Section 314(a) Request from FinCEN
Upon receipt of information from law enforcement, FinCEN posts Section 314(a) subject lists on a secure Internet website, known as the Secure Information Sharing System (SISS). Section 314(a) notifications are generated from FinCEN and sent to POCs via e-mail every two weeks, or more frequently in the case of an emergency request.
To ensure timely compliance and prompt responsiveness with a Section 314(a) Request, it is advisable that POCs check the SISS at least every two weeks, regardless of whether they have received an e-mail from FinCEN notifying them that the 314(a) list is available for review.
Information Contained in Section 314(a) Requests
A FinCEN 314(a) Request contains the names and addresses of subject individuals and/or entities that are suspected to be involved in money laundering or terrorist activities, along with any available identifying data that can be used by FIs to search their records.
Records and Data Search
After receipt of the Section 314(a) Request from FinCEN, the FI must search its records for data matches and identify any responsive information. The 314(a) list should be compared to all account holders of record during the previous twelve months and any transactions involving non-account holders conducted within the past six months.
Review and Reporting of Potential Matches
In its review for potential matches, the FI should consider all relevant information available to its customers. Positive matches must be submitted to FinCEN via the SISS within 14 days of the posting date of the request (or in the time frame otherwise specified in FinCEN’s request).
If the data search does not yield any matches of accounts or transactions, the FI is instructed not to reply to the 314(a) request.
Maintaining Confidentiality and Use of Third-Parties
Financial institutions are prohibited from using information provided by FinCEN in the 314(a) Request for any purpose other than to assist the institution in complying with the request.
Individuals with responsibility for reviewing and following up on potential matches should use discretion and maintain the confidentiality of FinCEN 314(a) Requests.
Although an institution may provide the Section 314(a) subject lists to a third-party service provider or vendor to perform or facilitate record searches, the institution must take necessary steps to ensure that the third-party safeguards and maintains the confidentiality of the information. Furthermore, the institution cannot provide direct access to the SISS to a third-party service provider or vendor.
Documentation and Record Retention
Institutions should document the results of all Section 314(a) searches. Although there are no specific recordkeeping requirements concerning 314(a) Requests, documentation of the request and record search should be maintained for a reasonable time period for audit purposes. FIs may follow the record retention period prescribed under the BSA, which is five years.
Conclusion
Compliance with Section 314(a) requires attentive, diligent communication, record-keeping and reporting. As only one of many compliance requirements, communication with FinCEN can add to an already busy workload for compliance professionals.
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