Improving Information Sharing on Suspected Financial Fraud

Improving Information Sharing on Suspected Financial Fraud

Congress drafted Section 314 of the USA PATRIOT Act (the “Act”) explicitly to incentivize financial institutions to work with law enforcement agencies and each other in support of the common goal to deter money laundering and terrorist financing. As written, Section 314(b) permits financial institutions to share information only in instances of suspected terrorism and money laundering. Thus, many banks in the United States are unable to share information under the 314(b) safe-harbor program when they suspect customers’ funds are derived from other fraudulent activities. This is a gap that impedes financial institutions’ efforts to combat financial crimes. Even conventional frauds weaken the financial system by drawing away government resources geared toward security and by decreasing customer confidence. There needs to be a more mainstream understanding that combating fraud can prevent money laundering and terrorism. As such, a reform to broaden the scope of Section 314 can stay within the terrorism-related goals of the Act while simultaneously protecting the financial system and its customers.

Click below to read the INSA Financial Threats Council's full report, Improving Information Sharing on Suspected Financial Fraud: Broadening Interpretation of the USA PATRIOT Act to Enhance National Security.

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