It's Baaaack!: 314(a) of the PATRIOT Act Returns - Moratorium Over

The new, revised version of 314(a) was released by FinCEN on February 6, and is effective February 18, 2003. The requirements are relatively easier to deal with, though the procedure will still demand many man hours of concentrated searching for financial institutions to comply. The scope of the search requests has been reduced, and the allotted time for reply has been lengthened.

In brief, the facts are these:

Requests for matching information will be issued by email or fax every two weeks, except in an emergency.
The search must start immediately upon receipt, and any reply necessary sent within 14 calendar days. If no matches, no reply necessary.
Requests will be for specific records, and constitute a one-time-only search (manually or electronically) of deposit accounts; funds transfer; sale of monetary instruments; loans; trust accounts; securities accounts; commodity, options or other derivative accounts; and safe deposit box records that are searchable electronically. Searches must cover account records for the preceding 12 months and transactions not linked to an account for the preceding 6 months.
A match requires only a check mark indicating a match - no further searching or documentation unless/until further contact from the government; no SAR filing.

Two important reminders came from FinCEN - there must be a contact in the financial institution that can be reached in case of a question. And all names on the request lists are confidential.

Some questions remain, even after this amendment, particularly in record retention of the requests and subsequent action by the financial institution. BANKERS' HOTLINE Advisor John Byrne noted that in the answer to one of the FAQ that you should not maintain the list for the purpose of evaluating whether to open an account or to conduct a transaction, unless it clearly states that you should treat the list for purposes of section 326. Further on an answer states that while there are no specific recordkeeping requirements, appropriate documentation of the request and record search should be maintained for a reasonable time period to provide for an effective and examination trail. They do not define 'reasonable time period', however. We expect FinCEN to address these concerns in the near future.

For additional explanation of the requirements of 314(a), check out www.bankersonline.com and read Sam Ott's article titled "Life After the Moratorium".

Copyright © 2003 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 12, No. 11, 2/03