Increased Prevalence of 314(b) References in SAR Narratives

16000 Number of SARs 14000 12000 10000 8000 6000 4000 2000 0 2012 2013 2014 2015 2016 44% Increase in 2016 In 2016, the number of financial institutions that filed at least one SAR indicating they had utilized the 314(b) process in the narrative increased by 37 percent from 2015. 398 487 2012 2013 2014 2015 2016 726 997 562 Number of Financial Institutions 37% Increase in 2016 Increased Prevalence of 314(b) References in SAR Narratives The number of SARs wherein the utilization of the 314(b) Program was discussed in the narrative have increased steadily over the past five years. Calendar year 2016 saw an increase of 44 percent over calendar year 2015. 314(b) References in Suspicious Activity Reports (SARs) Suggest Increased Information Sharing Among Financial Institutions Number of Financial Institutions Filing SARs Referencing 314(b) “During a five-year review period, the prevalence of terrorist financing SARs referencing 314(b) has increased significantly, from 25 such SARs in 2012, to 96 such SARs in 2016.” Number of SARs Indicating Terrorist Financing as the Suspicious Activity Type 25 30 2012 2013 2014 2015 2016 67 96 40 0 20 40 60 80 100 Terrorist Financing SARs Referencing 314(b) Are Increasing During a five-year review period, the prevalence of terrorist financing SARs referencing 314(b) has increased significantly, from 25 such SARs in 2012, to 96 such SARs in 2016. This indicates financial institutions are using 314(b) more frequently in their efforts to detect and report suspected terrorist financing. 25SARs in 2012 to96SARs in 2016 FinCEN Resource Center Insights U. S. Department of the Treasury . Financial Crimes Enforcement Network . Liaison Division . FinCEN Resource Center

Suspicious Activity Types Reported in SARs Most SARs reporting the use of the 314(b) Program in the narrative indicate money laundering as the suspicious activity category, with “suspicion concerning the source of funds” as the most frequently indicated sub-category1 . A review of SAR reporting indicates that financial institutions often use the 314(b) Program to gain clarity from other 314(b) participants on the source of funds moving through their financial institutions. In most of these SARs, the filing institution has contacted another institution through the 314(b) mechanism for additional information on one or more transactions. “A review of SAR reporting indicates that financial institutions often use the 314(b) Program to gain clarity from other 314(b) participants on the source of funds moving through their financial institutions.” Types of Financial Institutions 78 2 163 34 38 396 232 217 2396 6210 0 1000 2000 3000 4000 5000 6000 7000 Futures Commission Merchants Mortgage Companies Mutual Funds MSBs Precious Metals, Jewels and Stones Dealers Trust Companies Insurance Companies Casinos Broker-Dealers Depository Institutions Financial Institution Types Participating in 314(b) Information Sharing Many different types of financial institutions participate in the 314(b) Program. These include depository institutions, broker-dealers, casinos, insurance companies, money services businesses (MSBs), futures commission merchants, mortgage companies, mutual funds, precious metals, jewels, and stones dealers, and trust companies. Depository institutions and broker-dealers make up the bulk of 314(b) participants, but several financial institution types, specifically casinos and insurance companies, saw dramatic increases in participation during 2016. “Depository institutions and broker-dealers make up the bulk of participants, but several financial institution types, specifically casinos and insurance companies, saw dramatic increases in participation during 2016.” Suspicious Activity Sub-category in Money Laundering SARs (2016) 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Suspicious EFT/Wire Transfers Transaction out of Pattern for Customer(s) Suspicious use of Noncash Monetary Instruments Suspicious use of Multiple Accounts Suspicious Concerning the Source of Funds All Others 6% 11% 12% 12% 22% 37% 1The sub-category is officially referred to as the “suspicious activity type” on the SAR form. U. S. Department of the Treasury . Financial Crimes Enforcement Network . Liaison Division . FinCEN Resource Center