Nafcu calls for better information sharing to combat financial crime

‘Fraudsters often conduct fraudulent activities at multiple institutions before an institution recognises irregularities’

Nafcu the US National Association of Federally Insured Credit Unions has called for increased information sharing between organisations to combat money laundering and terrorist financing. 

Kaley Schafer, Nafcu’s regulatory affairs counsel, has offered recommendations to improve how information is shared between government agencies, law enforcement organisations and financial institutions through the USA’s Financial Crimes Enforcement Network’s (Fincen) 314(a) programme.

In a letter to Fincen, Ms Schafer acknowledged the benefits of the programme but said credit unions often don’t receive enough information from law enforcement organisations to effectively identify a potential threat.

“Fincen’s regulations state that each law enforcement agency seeking information through the 314(a) programme should include ‘enough specific identifiers, such as date of birth, address, and social security number that would permit a financial institution to differentiate between common or similar names,’” she wrote. 

However, when only a common name is provided, it can be difficult for credit unions to sort through member records – and this increases the risk of a false positive. Ms Schafer recommended that Fincen require certain information, such as a known telephone number, and information required for customer identification programmes (CIP) when submitting a 314(a) request.

She also asked that Fincen enhance the programme “by expanding the scope to allow financial institutions to share information about fraud”.

“Sharing information regarding fraud is currently limited to situations where the fraud is part of a money laundering scheme or terrorist financing,” Ms Schafer said.“Fraudsters often conduct fraudulent activities at multiple institutions before an institution recognises irregularities and raises suspicions.

“An expanded scope would lead to lower losses suffered and increase the chances of identifying suspects. Additionally, a more robust information sharing program would likely increase voluntary utilisation by credit unions.”