Alert November 24, 2009

FinCEN Proposes Rule to Expand Information Sharing Procedures

The U.S. Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”) proposed a rule (the “Proposed Rule“) that would expand the range of law enforcement agencies eligible to make requests for information under the information sharing procedures adopted by FinCEN pursuant to Section 314(a) of the USA Patriot Act.  Under the current regulation, federal law enforcement agencies may request that FinCEN require U.S. financial institutions to search their records to determine whether they have maintained an account or conducted a transaction with specified individuals, entities, or organizations suspected of engaging in terrorist activity or money laundering (“Section 314(a) Requests”).

The Proposed Rule would allow certain foreign law enforcement agencies to make Section 314(a) Requests.  To be eligible, the foreign law enforcement agency would need to be from a jurisdiction that is party to a treaty, such as the U.S.-E.U. Agreement on Mutual Legal Assistance, that provides U.S. law enforcement with reciprocal access to information in the foreign law enforcement agency’s home jurisdiction.  The Proposed Rule also would extend the authority to make Section 314(a) Requests to state and local law enforcement agencies.  In each case, the foreign, state or local law enforcement agency making the request would be subject to the information sharing rules’ requirement that the requesting law enforcement agency certify that, in the case of a money laundering investigation, the matter is significant and the law enforcement agency has not been able to locate the requested information through traditional methods of investigation.

Recognizing FinCEN’s ability to use its own resources to support and enhance the efforts of law enforcement agencies, the Proposed Rule also would allow FinCEN to initiate Section 314(a) Requests on its own behalf or on behalf of other divisions of the U.S. Treasury Department.  Comments on the Proposed Rule must be submitted to FinCEN by December 16, 2009.