In running the 314(a)yesterday, we had a hit where 2 of our customers are receiving ACH credits from a business on the 314(a)list. The business is not our customer. Does this scenario meet the definition of a "hit"?

No it does not. It does give you a red flag on your account-holder, IMO.

Thanks. I didn't think so either, but I needed to check. I agree, we need to investigate the purpose of the credits.

My understanding from FinCEN's FAQs is that you must report all matches you find, even if it pertains to an account or transaction that you were not technically required search.

I would send back that you have a match. If the investigator calls you, you can explain the situation at that time.

Everything that I have ever seen indicates that for you to consider something as a 314a match the name must be your customer. An originator on an incoming wire or ACH or a beneficiary on an outgoing wire is not considered a match. If I am wrong please show me where it states otherwise.

If you were only looking for your customers then you wouldn't have to search anything other than your own bank records - if we are required to search wire transactions then we should report any activity or transactions found for the named individual/entity - in this case the match is not to your customer but it is to a business that your customer is doing with, which is information that law enforcement may be interested in. I think you should get a ruling from FinCEN before discarding this possible match.

Ken, Do you have any input on this?

devsfan, log in to the 314a website, click on Answers to Questions, and click FAQs - I'm basing my answer on number 18. Thanks.

Looks like we have differing views on this. I am going to call FinCEN and I will post their response.

Ok, I just spoke with FinCEN. His direct quote...
"If the subject is not your customer, you do not submit a match".
In other words, submit a match only if the subject is your customer. I am sure this makes it all clear as mud. Of course, I have documented my conversation.

So if our customer is wiring out to a name on the 314 list, then we report it; but if someone on the 314 list is wiring to our customer, then we don't report it. That doesn't seem logical. Why are we even required to search our wire records then?

AuditorK: As I posted the other day, and as Cmone has confirmed with FinCEN, we only report a match if it is our customer. In your examples above, if your customer is wiring funds to someone on the list you do not report it (the beneficiary of the wire is not your customer), nor do you report when you receive an incoming wire when the originator is on the list (the originator is not your customer).

Banjo, I don't think that #18 covers this situation; look at #5 sub question 2.

Devsfan, I think #5 deals with what you are required to search. I agree that you do not have to search the originator on an incoming ACH to your bank, or the beneficiary of an outgoing.

However, I believe #18 states what you must do if you become aware of a match that is outside of the required search parameters. Our system, for example, searches both the originator and beneficiary of every ACH. Even though we are technically not required to search both parties to the ACH, I think if we become aware of a match we are required to report it.

As the instructions are "secret," I cannot be certain that my copy (12/04) is current. Nevertheless, my copy clearly indicates you should report any match you get even if your search was outside the parameters. ("Shall" would be more instructive.) That would include such things as recipients on outgoing wire transfers or payees on monetary instrument sales that are subject to record retention - you are not required to check either.

However, I see the FinCEN rep's comment as being a practical amendment of that direction. If you got a hit, but the person is not your customer, you don't need to report it because if they asked you for more information you probably don't have any...he's not your customer. As the published directions are clear, I would make a record of the conversation before relying on it.