Money Laundering, Terrorism and Financial Institutions - USA Patriot Act Monitor

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3/31/2006 PATRIOT Act Extension Refines Confidentiality Rules on National Security Letters
The USA PATRIOT Improvement and Reauthorization Act of 2005 contains relatively little that is specific to financial institutions, in part because a number of amendments to Title III of the PATRIOT Act were made by previous legislation. One area that deserves the attention of financial institutions concerns National Security Letters.  Consumer reporting agencies, because they often know a good deal about an individual’s accounts and assets, are particularly useful sources of information for the FBI in criminal investigations.  When a financial institution receives a National Security Letter, it must keep the contact confidential.  Amendments to the confidentiality provisions regarding the Letters indicate that the institution can seek legal advice, and disclosure is appropriate to other persons when necessary to comply with the request.  Those contacted by the institution are also bound by the confidentiality requirements.  In particularly sensitive cases, the FBI may require the institution to tell the FBI who it intends to contact in order to comply with the request. Presumably, the FBI may modify its request to obviate the need for the contact, or may advise the institution on what it can tell the third party in seeking to comply with the request.  Similar modifications of the confidentiality rules apply to disclosures to other governmental agencies for counterterrorism purposes.  Intentional violations of the confidentiality restrictions can lead to a five-year prison sentence. Provisions of the Extension Act affecting financial institutions will be the subject of coverage in an upcoming issue of the Monitor.  

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