Executive Summary: Section 314(b) of the USA Patriot Act allows financial institutions to share otherwise confidential information with each other in an effort to identify and report possible terrorist or money laundering activities. By complying with the requirements of Section 314(b) you are given a safe harbor from liability and could possibly reduce your firm's fraud losses and help fight terrorism.
Participation in Section 314(b) of the USA Patriot Act is voluntary and, even after agreeing to participate, you are not required to respond to any particular inquiry (unlike section 314(a) of the Act, which allows law enforcement agencies to send information requests to financial institutions). However, if your firm is an introducing broker-dealer, it is likely that your Clearing Agreement requires that you file a 314(b) certification so that information can be shared with or by your clearing firm about suspicious transactions.
To participate, you must file a Notice of Intent to Share each year with FinCEN and designate an individual to send and receive information requests. The notice is effective for one year from the filing date. In order to continue to participate, you must re-submit the notification each year. Notices are submitted electronically to FinCEN through the website https://www.fincen.gov/314b/314b_notification.php. A copy of the 314(b) confirmation letter from FinCEN should be maintained in your firm's Information Sharing or 314(b) file as evidence that the required filing has been made. Participating firms are also required to take reasonable steps to verify that the counterparty financial institution has submitted the notice. A list, which is updated quarterly, is transmitted directly to institutions that have filed. You may also request a copy of FinCEN's confirmation of the Notice of Intent to Share or contact the other financial institution directly to verify that it has filed the notice.
Information received from another financial institution cannot be used for any purpose other than identifying and reporting suspected money laundering or terrorist activities, determining whether to establish or maintain an account or to engage in a transaction, or assisting the institution in complying with its requirements under the rule. If, as a result of sharing information, you know of or suspect money laundering or terrorist activity, and you are subject to the suspicious activity reporting obligations of the Act, you must file a suspicious activity report (SAR) with FinCEN.
If you have questions regarding section 314(b) of the USA Patriot Act or if you would like assistance in filing the required notification, please contact your Compliance Partners account manager or one of the compliance specialists at Regulatory Compliance at 603-434-3594.
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