ARLINGTON, Va.—The Financial Crimes Enforcement Network has been provided with recommendations NAFCU said are intended to strengthen the information shared between government agencies, law enforcement and financial institutions through FinCEN’s 314(a) program—and to better combat money laundering and terrorist financing.
In a letter to FinCEN, Kaley Schafer, NAFCU's regulatory affairs counsel, acknowledged the benefits of the program but said credit unions often don't receive enough information from law enforcement to effectively identify a potential threat.
"FinCEN's regulations state that each law enforcement agency seeking information through the 314(a) program should include 'enough specific identifiers, such as date of birth, address, and social security number that would permit a financial institution to differentiate between common or similar names,'" Schafer wrote.
One Difficulty
However, when only a common name is provided, it can be difficult for credit unions to sort through member records and increases the risk of a false positive, added Schafer, who recommended that FinCEN require certain information, such as a known telephone number, and information required for customer identification programs (CIP) when submitting a 314(a) request.
Schafer also flagged for FinCEN difficulties law enforcement faces related to documenting the seriousness of the underlying criminal activity when placing a suspect on the 314(a) list and requested that the agency ensure the efficiency of the program.
Better Sharing
On the 314(b) information sharing program, Schafer asked that FinCEN enhance it "by expanding the scope to allow financial institutions to share information about fraud."
"Sharing information regarding fraud is currently limited to situations where the fraud is part of a money laundering scheme or terrorist financing," Schafer said. "… Fraudsters often conduct fraudulent activities at multiple institutions before an institution recognizes irregularities and raises suspicions. An expanded scope would lead to lower losses suffered and increase the chances of identifying suspects. Additionally, a more robust information sharing program would likely increase voluntary utilization by credit unions."