WASHINGTON—The Financial Crimes Enforcement Network (FinCEN) has issued a new fact sheet on section 314(b) of the USA PATRIOT Act it said is meant to enhance utility of the program and make clarifications on information sharing between financial institutions.
Separately, NAFCU is urging FinCEN to not increase the cross-border threshold.
The fact sheet replaces an existing fact sheet that was previously issued in 2016.
The fact sheet suggests financial institutions may share information regarding fraud where appropriate and remain complaint under FinCEN’s current regulations only in situations where a financial institution suspects money laundering or terrorist activity, and is sharing the information for an appropriate purpose under section 314(b), NAFCU said.
In addition, the fact sheet provides that financial institutions may share information under the program in situations where they do not have specific information that the activity directly relates to proceeds of a specified unlawful activity and that a financial institution does not need to have made a conclusive determination that the activity is suspicious in order to qualify for the safe harbor.
“Although this is not explicit in FinCEN’s regulations, the fact sheet provides additional guidance on how and when financial institutions like credit unions can voluntarily share information about fraud with other financial institutions,” NAFCU explained.
NAFCU: No Need for Increase
Separately, FinCEN is being asked to not increase the cross-border threshold as the costs of credit union compliance and costs to payments systems outweigh the usefulness when Bank Secrecy Act (BSA) reports provide duplicate information.
The request was made by NAFCU's Kaley Schafer in response to a joint notice of proposed rulemaking, issued by FinCEN and the Federal Reserve, to amend the BSA’s recordkeeping and travel rule regulations.
The rule, proposed last month, does not impose any new requirements to retain additional or new information under the recordkeeping and travel rules, other than those resulting from the change to the applicable thresholds. Although the proposal focuses on cross-border transactions, it also raises the question of domestic thresholds, which NAFCU is also asking FinCEN not increase at this time.
In the letter, Schafer, NAFCU’s senior regulatory counsel, recommended further studying of the impacts on smaller institutions, including associated compliance and burden costs.
‘Not Consistent’
“Despite the impact on smaller institutions, the proposal theorizes that the impacts are minimal on payments systems as many financial institutions currently collect and retain all information required under the recordkeeping and travel rule, regardless of the dollar amount of the transaction,” wrote Schafer. “However, this practice is not consistent among credit unions, and variation depends on volume, asset size of the institution, and internal policies.
“This serves as evidence to the contrary for FinCEN’s belief that most financial institutions already collect the requisite information, therefore the impacts of the proposal would be minimal,” Schafer added. “Regardless of credit unions’ current practices, a lower threshold will certainly increase compliance demands on staff.”
In addition, Schafer expressed NAFCU’s support for the definition of "money" as proposed, which will “resolve ambiguities surrounding applicability to convertible virtual currencies (CVCs).”