Under section 314(b) of the Patriot Act financial institutions are permitted to share information with one another regarding individuals they suspect may be involved in terrorist financing or money laundering activities. Those institutions who elect to share information under 314(b) are provided with a safe harbor from liability if they register with FinCEN to share, verify that the institution with whom it will share information with has also registered FinCEN of its intent to share, use the shared information only for the permissible purposes and have procedures in place to protect the shared information.
We often are asked if an institution can share information for reasons other than terrorist financing or money laundering. The short answer is “no.” Sharing is limited to activity that “may involve possible terrorist activity or money laundering.” [31 CFR § 1010.540(b)(1)] So, if an institution shares for another reason, such as check kiting or fraud scenarios, it loses the safe harbor provided under the regulation.
And remember, Suspicious Activity Reports (SARs) are confidential. The regulatory provisions do not allow an institution to share or disclose any information that would reveal the existence of an existing SAR with another institution. FinCEN’s SAR regulations do allow for the submission of joint SARs by financial institutions. When financial institutions identify suspicious activity through collaboration pursuant to Section 314(b), they may consider whether a joint SAR would be the most efficient way to provide highly useful information to law enforcement.
Law-Related Services Disclosure. Please be advised that CSG provides financial services compliance audit and consulting services to our clients. The services that we provide include certain tasks that may be characterized as “law-related services” under Rule 5.7 of the Rules of Professional Conduct governing lawyers. Since some of our employees are lawyers with an active bar license but are NOT engaged in the private practice of law, that Rule requires us to make disclosures clarifying that the services we perform may be law-related services, but they are not legal services. Because they are not legal services, those services and our relationship will not be governed by the Rules of Professional Conduct that guide the client-lawyer relationship, such as rules applicable to privileged communications and prohibitions of conflicts of interest. Notwithstanding this disclaimer, we will continue to govern our relationship with you using reasonable ethical and professional standards that are expected to meet your expectations.