Invest1 publisher2 min readPublished
FinCEN's guidance now names fraud in a 9/11-era safe harbor Congress wrote for terrorism
FinCEN's guidance for the 314(b) sharing program now leads with fraud, the statute behind it has not changed, and the roughly 4,500 participating banks and credit unions are relying on a reading no court has tested.
The Investor · Invest desk
What happened
- FinCEN rewrote the guidance for the Section 314(b) counterterrorism information-sharing program so that fraud now leads, while the statute and the 2002 rule behind it stayed as written.
- Suspicious activity reports citing 314(b) rose from 17,384 in calendar 2020 to more than 65,480 in fiscal 2025, while terrorism-related filings went from about one in 300 of that traffic to one in 800.
- No court has evaluated FinCEN's assertion that the anti-money-laundering and terrorism channel also permits sharing about fraud, and FinCEN declined to comment on the record.
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Why it matters
- exposure The test case, when it comes, will be a defamation or libel claim, and the defendant is the bank that sent the tip, not the bureau whose guidance said the tip was covered.
- capability Device identifiers, IP addresses, geolocations and transaction records can move between institutions because the harbor takes the liability out, and about half of US financial institutions now sit inside that channel.
- decision Compliance chiefs now choose between routing fraud intelligence through a channel whose fraud purpose exists only in guidance, and holding it back until the text of the statute names fraud.
- contradiction The OCC publicly endorses the fact sheet as support for anti-fraud work, while a lawyer who spent more than three decades at the same agency says a court could confine the harbor to laundering and terrorist financing.
Divide the fiscal 2025 total by the 2020 one and the channel is 3.8 times bigger in five years, about 48,100 additional filings that cite it [1][2]. Spread over the roughly 4,500 banks and credit unions in the program, fiscal 2025 comes to about 15 citations each [5][3]. The terrorism ratio is what moved: at one in 300 of 2020's traffic and one in 800 of 2025's, the terrorism-related count itself went from roughly 58 filings to roughly 82 [4][4].
Two things about those counts. Calendar 2020 against fiscal 2025 is not a matched window, and a citation exists only because a bank wrote into a suspicious activity report narrative that 314(b) sharing helped produce the filing. American Banker described those citations as a proxy for what gets shared [20].
The drift is legible in the documents. The 2002 final rule never mentions fraud [13]. A later fact sheet keeps the purpose narrow, saying sharing exists "in order to better identify and report potential money laundering or terrorist activities" [14]. The June document widens it, describing sharing as a response to "activities a financial institution suspects may involve possible terrorist activity or money laundering, such as fraud and other criminal activity" [15]. In that sentence fraud is an example of terrorism or money laundering [15]. The fact sheet "supports this administration's whole-of-government efforts to combat fraud," the OCC wrote [16]. The OCC and the FDIC did not respond to American Banker's requests for comment [17].
The legal question is narrow. A court could find "that the scope of the safe harbor is limited to money laundering and terrorist financing," said Daniel Stipano, a Davis Polk partner who spent more than 30 years at the OCC, including as deputy chief counsel [9].
There are three ways this ends. Congress or a fresh rulemaking names fraud, and the question closes. Or a court reads the money-laundering predicate broadly, which the statutes already invite, since federal money-laundering law has always counted fraud among the crimes that produce dirty money, and a bank could always share about fraud proceeds that were being laundered [18]. Or the case never arrives, because a plaintiff first has to learn that their bank told another bank something false about them, and that is not a letter banks send [11]. The third is the most likely of the three, and it is the least comfortable for the filers, because the liability does not shrink while it goes untested: on American Banker's reading, one well-argued lawsuit would stand to end the sharing [19].
What to watch
- A defamation or libel complaint in which a bank pleads 314(b) as its defence, which would be the first court test of FinCEN's reading.
- An amendment to 314(b) or a new FinCEN rulemaking that names fraud as a sharing purpose in the text rather than the guidance.
- Whether fiscal 2026 citation counts keep climbing at the same rate once the June guidance is fully absorbed.