The U.S. Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”) adopted a rule (the “Final Rule”) to 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. The Final Rule was adopted without modification to FinCEN’s proposed rule, which was described in the November 24, 2009 Alert.
Under the Final Rule, which was effective on February 10, 2010, state, local, and certain foreign law enforcement agencies will now be able to 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 (such requests are referred to below as “Section 314(a) Requests”). The Final Rule also allows FinCEN to initiate Section 314(a) Requests on its own behalf on or on behalf of other divisions of the U.S. Treasury Department. Prior to adoption of the Final Rule, only federal law enforcement agencies were eligible to make Section 314(a) Requests.
In the preamble to the Final Rule, FinCEN responded to various issues raised by commenters regarding the proposed rule. For example, some commenters requested clarification of the requirements for foreign, state, and local law enforcement agencies that submit Section 314(a) Requests. Like federal law enforcement agencies, a foreign, state, or local law enforcement agency making a Section 314(a) Request must certify that each individual, entity or organization about which is seeking information is engaged in, or is reasonably suspected of engaging in, terrorist financing or money laundering, and, 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. FinCEN explained that such certifications from foreign, state, and local law enforcement agencies must include a citation of the relevant statutory provisions; a description of the suspected criminal conduct; for money laundering cases, a description of why the case is significant; and a list of the traditional methods of investigation and analysis which have been conducted prior to making the request.In response to comments asking for clarification of the steps foreign, state, and local law enforcement agencies will need to take in the event a financial institution reports a match, FinCEN noted that such steps are not addressed by the Final Rule. Foreign, state, and local law enforcement agencies will instead need to continue to follow the standard procedures that they currently follow in order to obtain financial information from financial institutions, such as through issuance of a subpoena, a letter rogatory, or a national security letter. FinCEN also dismissed comments raising concerns about the confidentiality of information that would be shared by FinCEN with foreign, state, and local law enforcement agencies, explaining that the information in a Section 314(a) Request response, which consists of only a confirmation that a matching account or transaction exists, is extremely limited.