Compliance Blog

Written by Bernadette Clair, Senior Regulatory Compliance Counsel

FinCEN Advisory on Human Smuggling and Human Trafficking Financial Red Flags. FinCEN has issued Advisory FIN-2014-A008 to provide guidance to financial institutions on how to detect and report suspicious activity that may be related to human smuggling and/or human trafficking.  The guidance includes financial “red flags” that may indicate financial activity related to human smuggling or human trafficking in Appendices A and B, and also provides key terms that financial institutions can use when reporting this type of suspicious activity.  FinCEN request that financial include the key term(s) “ADVISORY HUMAN SMUGGLING” and/or “ADVISORY HUMAN TRAFFICKING” in the Narrative and the Suspicious Activity Information, to the extent they are able to distinguish between the two.

Here’s an excerpt from FinCEN’s guidance to financial institutions, starting on page 4:

“Due to some similarities with legitimate financial activities, financial institutions may consider evaluating indicators of potential human smuggling or trafficking activity in combination with other red flags and factors, such as expected transaction activity, before making determinations of suspiciousness. No one transaction or red flag by itself is a clear indicator of human smuggling or trafficking. Additionally, in making a determination of suspiciousness, financial institutions are encouraged to use previous FinCEN advisories and guidance as a reference when evaluating potential suspicious activity. For instance, in May 2014 FinCEN published an advisory on the use and structure of funnel accounts,⁴ one of the red flags identified in Appendices Aand B of this advisory. Financial institutions may consider incorporating the guidance outlined in this advisory in a manner that is commensurate with their risk profile and business model.

 

In evaluating whether certain transactions are suspicious and/or related to human smuggling or trafficking, financial institutions are encouraged to share information with one another, as appropriate, under Section 314(b) of the USA P ATRIOT Act.⁵ Section 314(b) establishes a voluntary information sharing mechanism allowing financial institutions to share information with one another regarding possible terrorist activity or money laundering and provides financial institutions with the benefit of a safe harbor from liability that might not otherwise exist with respect to the sharing of such information. ⁶ Thus, suspected money laundering involving the proceeds of human smuggling or human trafficking activity could be shared amongst financial institutions under Section 314(b).” (Footnotes omitted)

 

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Increased Regulations Z and M Threshold Levels for 2015. Last week, the Fed and CFPB announced final rules implementing increased Regulation Z and Regulation M dollar thresholds for exempt consumer credit and lease transactions. Effective January 1, 2015, the dollar threshold for both regulations will be $54,600 (an increase of $1,100). These thresholds are adjusted annually to reflect increases in the Consumer Price Index for Urban Wage Earners and Clerical Workers, as applicable.