Info sharing and fraud

Posted By: WDCA

Info sharing and fraud - 07/08/19 03:24 PM

Can it be argued that money laundering is the basis for safe harbor under 314b even when the activity relates to fraud?

Our aml vendor that offers a function to collaborate with other FI's under the 314b info sharing rule is encouraging their system function to share info with other local FI's regarding a local fraud ring. In most fraud circumstances I see, I never linked fraud to money laundering, but our vendor's stance is that anytime you have funds that you suspect are related to fraud in or moving through your financial institution, you should also be suspicious that transactions made with those funds may involve money laundering.

Does this stance give us the go-ahead with safe harbor to share info about various fraud matters?
Posted By: rlcarey

Re: Info sharing and fraud - 07/08/19 03:31 PM

https://www.fincen.gov/resources/statute...sharing-covered
Posted By: Buddy the Elf

Re: Info sharing and fraud - 07/08/19 07:43 PM

I would suggest reading through the SUAs listed in 18 USC 1956 and 1957. It's a long list and may add the clarification around fraudulent activities that you're referring to. But ultimately, it's going to have to be your decision based on what you're comfortable with because there isn't any guidance beyond what Randy linked to.
Posted By: ColoradoAML

Re: Info sharing and fraud - 07/09/19 10:31 PM

My AML vendor is extremely liberal in their interpretation of 314(b) and how it can be used, to the point that I've restricted viewing access for my staff. I would make sure you're coming to your own conclusions independently of theirs, and if I was tempted I'd probably have my legal council in the decision.

The real answer would probably have to be tested in court, but to add to what those above have said, plenty of people would argue that fraud may not provide safe harbor. The Clearing House even presented it as a recommendation to Congress.
Posted By: WDCA

Re: Info sharing and fraud - 07/11/19 07:07 PM

Thanks for the comments. My take away is to enhance procedures and processes to document why we suspect that the transaction involving proceeds of an SUA relates to money laundering or terrorist activity prior to info sharing.