Life After The Moratorium

by Sam Ott, BOL Guru

FinCEN has announced that financial institutions will start receiving Section 314(a) of the USA PATRIOT Act information requests as February 18, 2003. The moratorium was nice, but we all knew it wouldn't last forever. FinCEN did listen to the comments and suggestions that were raised as a result the initial request procedures and has made some significant changes.

FinCEN provided guidance in the form of Instructions For Responding To Section 314(a) Requests and FAQs to assist financial institutions in complying with the new requirements. Initially, it posted those items on its Web site. On February 12, 2003, it removed them from the Internet and announced that it would instead be transmitting the instructions directly to financial institutions. It also indicated the first round of requests will be made February 18th.

BOL has arranged the key points of the Instructions and the FAQs in categories to make it easier to familiarize yourself with the new procedures.

GENERAL INFORMATION

• Section 314(a) requests will issued by email or fax every two weeks, except in an emergency situation they may be more frequent.
• A financial institution must identify one or more point-of-contact persons who can respond to requests from FinCEN or the requesting federal law enforcement agency.
• Affiliates institutions may establish a central point of contact to handle all requests for the affiliated institutions.
• Financial institutions are requested not to keep a list of named subjects of Section 314(a) requests for the purpose of deciding whether or not to open an account or conduct a transaction.
• Section 314(a) requests are not part of the customer identification program requirements of Section 326 of the USA PATRIOT Act or the OFAC rules.
• The Control List has been discontinued and should not be used.

SEARCHES

• One time searches must be conducted manually or electronically of the following records:
  • deposits accounts;
  • funds transfer;
  • sale of monetary instruments;
  • loans;
  • trust accounts;
  • securities accounts; and,
  • commodity, options or other derivative accounts.

If a record is not maintained in electronic form, it needs only to be searched if it is required to be kept under federal law or regulation.

Searches also are required of safe deposit box records that are searchable electronically.

• All searches must be completed within fourteen calendar days of the receipt of the request. The search must commence immediately unless received after hours or on the weekend, then it must start the next business day.
• Searches must cover account records for the preceding 12 months and transactions not linked to an account for the preceding 6 months.
• Checks, monetary instruments, signature cards and reports previously filed with FinCEN (SARS and CTRS) do not have to be searched.
• The requests can be directed geographically, but most will be sent nationwide so you can expect to have many "no match" search results.
• Requests and searches are CONFIDENTIAL and should not be disclosed to anyone not necessary to complete a search. Third party vendors and service providers of software necessary to conduct a search can be notified as long as the institution takes steps necessary to ensure the third party safeguards the information. What action by a financial institution constitutes necessary steps is not indicated.

MATCHES

• A match does not occur if only a portion of a name, such as a last name, matches and none of the other information corresponds to the account or transaction in question.
• If a match occurs, the search can stop and the match is reported to FinCEN on a Subject Information Form. If a request contains multiple names, the search must continue regarding the unmatched entities.
• The Subject Information Form only requires that an "X" be placed next to the name for which a match was found. DO NOT submit any records or other information with the form.
• Subject Information Forms must be either emailed or faxed to FinCEN.
• If no match occurs, no Subject Information Form or any other report should be filed with FinCEN.
• If you have a match and file a Subject Information Form, you may subsequently receive a Grand Jury Subpoena, a National Security Letter or an Administrative Summons.
• Financial institutions with matches are not required to close accounts. If the decision is made to close an account, the institution is encouraged prior to the closing to contact the law enforcement agency who initiated the request.
• A match does not require the filing of a SAR.

FinCEN indicated that the first wave of the information requests would be sent the week of February 17, 2003. It is not clear if the requests will be issued on the same weekday every time, so make sure you note the date you receive each batch. You must complete your searches on all requests within fourteen calendar days of the date of receipt. Each batch could contain an unlimited number of requests. You have to conduct a search on each request. Remember, if you don't have a match you don't need to do anything regarding that request. If a match occurs, you can stop the search on other accounts and transactions relating to the entity that was matched. Don't forget all requests and search results are CONFIDENTIAL.

First published on BankersOnline.com 2/7/03. Updated 2/12/03.