Section 314(b) and Section 314(a) of the USA Patriot Act both relate to information requests under the Banking Secrecy Act (BSA). Section 314(a) mandates information sharing between financial institutions (FIs) and law enforcement per requests issued by FinCEN. Section 314(b) extends information-sharing protections for FIs that choose to voluntarily share important BSA information.
Section 314(b) serves as a safe harbor that protects FIs against privacy liabilities. A financial institution may choose to voluntarily share information because it lowers risk for its account holders. Free exchange of pertinent information related to terrorist activities and money laundering helps to combat these crimes, which ultimately benefits everyone.
What are the Key Differences Between Section 314(a) and 314(b)?
While they are closely related, there are some standout differences between the two sections of the Patriot Act:
- Participation – While participation in the information-sharing aspects of 314(a) is mandatory, sharing information via 314(b) is voluntary.
- Point of Contact – Points of contact of 314(a) information sharing is designated through federal and/or state regulators whereas contacts for 314(b) register through the FinCEN website. Points of contact under 314(a) are limited to four per institution, whereas those under 314(b) may be unlimited.
- Registration – Registration is more stringent with 314(a), which requires contact information to be updated when any changes occur. Registration for 314(b) happens annually.
- Data Sharing – Information shared under 314(a) goes directly to FinCEN, which shares that information with law enforcement agencies. Information shared under 314(b) is shared with other participating financial institutions.
- Record Keeping – FIs must document all responses to search requests under 314(a), while they must document responses and requests under 314(b).
- Documentation – Both 314(a) and 314(b) require written policies and procedures.
Why is Section 314(b) Important?
Voluntary information sharing between financial institutions is a valuable tool that can help with due diligence. That said, the documentation, confidentiality, and re-enrollment tasks can be a big ask, especially for smaller institutions that don’t have the same resources as their larger counterparts.
Participating FIs benefit because information requests may prompt an inside look at transactions and accounts, helping to uncover suspicious activity they might otherwise miss. Overall, 314(b) helps identify unusual activity that might otherwise go unnoticed while participation in it may also help avoid unnecessary suspicious activity report (SAR) filings. Financial institutions can work together to gain clarity on suspicious activity that may have a valid explanation.
While 314(b) requires a bit more recordkeeping, it also affords FIs more resources and collaboration when it comes to evaluating suspicious activity. Most FIs benefit from this network as it helps them do their due diligence, and ensures they understand their own customers’ activities. The bottom line is that 314(b) promotes increased communication between FIs – communication that may keep fraud and other unwanted activity to a minimum.
Compliance refers to the regulations, laws, and guidelines governing businesses and financial institutions.
- 1What is SOC 2?
- 2What is Section 314(b)?
- 3Financial Crimes Enforcement Network (FinCEN)
- 4Customer Due Diligence
- 5Customer Identification Program
- 6What is Section 314(a)?
- 7Suspicious Activity Report
- 8Politically Exposed Person
- 9Specially Designated Nationals
- 10What is a Currency Transaction Report?
- 11What is OFAC?
- 12What is the Bank Secrecy Act (BSA)?
- 13What is PCI DSS Certification?
- 14What is AML Compliance?
- 15Office of the Comptroller of the Currency (OCC)
- 16What is the Electronic Fund Transfer Act?
- 17Personal Identifiable Information (PII)
- 18Compliance Risk Management
- 19What is Know Your Customer (KYC)?
- 20Know Your Business (KYB)
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