Your credit union may occasionally receive a request from law enforcement or an appropriate (state or federal) agency to search your records or to produce information and documents related to a member account. Knowing how to handle these requests in a timely manner is as important as ensuring procedures are in place to properly maintain documentation.

You can find details about what examiners might be looking for in the FFIEC BSA manual chapter on Information Sharing. FinCEN also released an advisory detailing how they expect the confidentiality of SAR fling details to be maintained. It includes details on how to contact their regulatory hotline if you encounter a situation or request that you need to confirm.

314(a) Requests

Section 314(a) of the USA PATRIOT Act authorizes law enforcement to communicate with financial institutions about specific individuals. Requests come to credit unions via email every two weeks asking that you search your records and report back to FinCEN if a named subject maintained an account with you in the previous 12 months or conducted transactions within the last six months. A reply is sent to FinCEN only when and if your credit union has a positive match, and they are very rare. 

The requests are specific to the names and entities FinCEN includes, and names on the list should never be used for any other purpose. Documentation should be kept to show the search was done in a timely manner. The email generally comes to one or two individuals at the credit union and often the BSA compliance officer is one of them. Knowing who receives the 314(a) search request at your credit union is a good question to ask. It is also suggested to include a second person as a backup in the process to prevent gaps in searching and responding timely, when appropriate. 

314(b) Voluntary Information Sharing 

Section 314(b) is a process that allows two or more entities, including financial institutions, to register with FinCEN and provide "financial institutions with the ability to share information with one another, under a safe harbor that offers protections from liability, in order to better identify and report activities that may involve money laundering or terrorist activities." The sharing is voluntary and includes a safe harbor from liability for information shared under the program. It can also be done quickly at the time it is needed or requested, so ongoing filing and renewal may not be necessary. This infographic shows the increase and types of SAR filings that result from the process.

According to FinCEN, credit unions can find the current list of 314(b) participants on their FI Portal. You can register for access to the portal at https://fiportal.fincen.gov or contact the 314 Program Office with questions at sys314a@fincen.gov.

In December 2020, FinCEN's (then) Director Kenneth Blanco discussed the importance of the process and released an updated fact sheet detailing the program. It even notes that a joint SAR could be filed if two entities felt it was appropriate and explains that the process can involve investment firms, insurance companies, casinos, or other appropriate non-financial institutions.

We have had some examples of credit unions in Montana that were either contacted for a 314(b) discussion or needed to engage in one. Two of these scenarios led to uncovering elder financial exploitation, and another allowed a credit union to confirm that a CTR was filed by the other institution after a series of deposits at the Montana credit union's ATM triggered filing for a non-member. The ability to discuss particulars with another financial institution can be invaluable to investigating possible money laundering activity. It may also call attention to activity that was not on your radar.

Copying Member Documents

Question: We have members who ask us not to photocopy their driver's license. How do we comply with BSA regulations if we don't keep a copy?

Answer: There can be issues with keeping copies of identification documents — military personnel are discouraged from allowing their military ID to be copied, photo ID is a potential fair lending issue if kept in a loan file, and the SSA discourages consumers from allowing their Social Security cards to be copied. That is OK, though. The credit union can still comply with the regulation and your policy.

We often think of retention as "keeping a copy" of an original document that was shown. The regulation requires examination of documents for identification purposes, and notes that retention includes "a description of any document that was relied on," and does not require a physical or imaged copy be retained. Instead, it is acceptable for your staff to note what was seen and return the identification or documentation to the member or borrower.

The credit union's policy should specify where the notes are made and how detailed they are about the documentation seen. For example, noting it was a "Montana driver's license, #123456789, issued 1/15/1994, expires 1/15/2025" may be an acceptable notation to show it was unexpired, issued in a particular state, and allowable under your policy for identifying documentation.

Donya Parrish, VP Risk Management | donya@mcun.coop | 406-459-3497