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Thursday, November 6, 2014

USA Patriot Act: Information Sharing and Disclosure


QUESTION
As a non-bank residential mortgage lender and originator, I know that our company is now required to file SARs with FinCEN, but are we also subject to the information sharing and disclosure provisions of Sections 314(a) and (b) of the USA PATRIOT Act? 

ANSWER
Yes as to both 314(a) and (b). 

The plain language of the regulation (31 CFR §1029.500) states that “[l]oan or finance companies are subject to the special information sharing procedures to deter money laundering and terrorist activity requirements set forth and cross referenced in [subpart E of part 1029],” which, in turn, makes reference to the general regulations implementing 314(a) and (b) contained in 31 CFR §1010, subpart E. Accordingly, RMLOs are specifically subject to the information sharing provisions of 314(a) and (b).

However, as a practical matter, unless a financial institution receives a 314(a) request from FinCEN requiring it to search for and disclose records, they have no obligation under the 314(a) rule. And, although not required to do so, RMLOs can participate in protected information sharing under 314(b) by completing and submitting the electronic information form on the FinCEN site (http://www.fincen.gov/statutes_regs/patriot/section314b.html) and selecting “Other” for the “Primary Federal Regulator” field.

Brennan T. Holland
Director/Legal & Regulatory Compliance
Lenders Compliance Group