FinCEN Supports Banking Consortium Approach to Fraud

The Financial Crimes Enforcement Network (FinCEN) issued guidance Friday (Sept. 5) that it said aims to encourage appropriate, voluntary cross-border sharing of information between and among financial institutions, including appropriate foreign ones.

This information sharing can help financial institutions combat money laundering, terrorist financing and illicit finance activity involving drug trafficking organizations, foreign terrorist organizations and fraudsters, FinCEN said in a Friday press release.

“The guidance clarifies that while financial institutions are prohibited from sharing Suspicious Activity Reports (SARs), as well as information that would reveal the existence of a SAR, the Bank Secrecy Act and its implementing regulations generally do not prohibit cross-border information sharing,” the release said.

In the guidance, FinCEN said that financial institutions are better able to detect and combat illicit finance activity if they share information rather than keeping it siloed.

This information can include, when appropriate, transaction records, customer and account information, and investigative materials, according to the guidance.

FinCEN said in its Friday press release that it issued the guidance in consultation with the Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation and National Credit Union Administration.

PYMNTS reported in December that companies within security-critical sectors like banking and payments are wising up to the benefits of data sharing across their ecosystems to combat fraud.

Combining anonymized data from multiple sources can enable consortiums to spot suspicious patterns that would otherwise fly under the radar.

At the same time, data sharing comes with its own set of headaches, from privacy concerns to regulatory hurdles, so financial institutions must ensure that the data is clean, secure and compliant with regulations.

Entersekt Chief Product Officer Pradheep Sampath told PYMNTS in August that while traditional, historical data remains a cornerstone of fraud prevention, financial institutions also need newer “radars” like transaction-driven insights, behavioral signals, device fingerprints and geolocation patterns.

“Looking back can’t always give you answers to evolving threat vectors,” Sampath said. “You need both accuracy and speed — protecting legitimate users while quickly identifying emerging fraud patterns.”

The PYMNTS Intelligence report “The State of Fraud and Financial Crime in the U.S. 2024: What FIs Need to Know” found that 40% of financial institutions reported that their fraud-related losses grew in the previous 12 months.

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