The U.S. Treasury Department may be denying state and federal law enforcement authorities a critical source of information for money laundering and terrorist financing investigations by opting not to forward to money services businesses information requests authorized under the Patriot Act. These Section 314(a) information requests allow law enforcement agencies to gather account and transaction information from financial institutions to aid in money laundering probes. The law enforcement agency is responsible for submitting the requests to the Treasury's Financial Crimes Enforcement Network, which e-mails them to more than 27,000 financial institutions every two weeks. The institutions must search their records...
A federal letter asking money services businesses to turn over data on their agents marks the first broad U.S. effort in 14 years to better understand the scope of the fractured money transmitter market.
Some 17 federal law enforcement agencies issued 826 requests to financial institutions, garnering nearly 49,000 positive matches and 41 convictions, a rate of about 5 percent, according to the Financial Crimes Enforcement Network.
The system, expected to be in operation next month, will help banks streamline the process of providing examiners with proof of compliance with law enforcement requests, FinCEN Director James Freis said.
Because data protection laws in Europe and elsewhere make it difficult for a multinational financial institution to share data among all of its branches, the laws "will be the biggest impediment to protection from terrorism," the officials said.
Limits such as a rule prohibiting financial institutions from sharing SAR information with nonbank affiliates hinder banks due diligence efforts, Bank of America Compliance Chief William Fox said at a compliance conference in Atlanta.
Many bank employees can't differentiate between SAR-related and other information requests they receive from law enforcement agencies, regulators and other financial institutions. As a result, some hinder financial investigations by ignoring the requests.