Written by Shari R. Pogach, Regulatory Paralegal
Last month I attended the 2015 Mid-Atlantic Anti-Money Laundering (AML) Conference, a two-day symposium sponsored by ICE/Homeland Security Investigations, the Federal Bureau of Investigation (FBI), the Drug Enforcement Administration (DEA) and the United States Secret Service (USSS). This conference gives law enforcement agency, regulatory agency and financial industry representative attendees the chance to focus on money laundering trends, successful enforcement investigations and lessons learned. One panel discussion by representatives from the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency covered Bank Secrecy Act (BSA) from a financial regulator’s perspective. While the discussion covered banks as there have been a number of significant BSA enforcement actions against banks of late, I think some of the points brought up by the panelists are useful.
Apparently the majority of deficiencies in BSA programs found through bank examinations result from a series of interrelated processes and internal controls, i.e., a weakness with one control leads to other weaknesses. The panel stressed that regulators were not out to perform “gotchas” in looking for deficiencies but rather that an institution was expected to maintain a meaningful risk assessment methodology to ensure: 1) appropriate risk-rating of customers, products and services; 2) the proper monitoring and management of actual risks; 3) the detection and reporting of suspicious activity; and 4) the limitation of exposure and prevention of money laundering or terrorist financing. An institution’s board should be continuously advised of changing risk levels. Other BSA program deficiencies concerned suspicious activity reports (SARs) – such as not documenting why a SAR was not being filed and not properly adjusting changing SAR criteria/parameters, rather than just using “off the shelf” monitoring criteria.
The panel also provided the criteria for a strong BSA/AML program:
- Low turnover, an experienced, trained BSA officer and management;
- Repercussions for unethical behavior by personnel;
- A clear BSA/AML risk appetite;
- Directors are trained/apprised of BSA/AML issues;
- BSA officers are brought in early and often to assist with product development;
- BSA staff are engaged with all business lines;
- The ability to identify across an institution the BSA/AML risk in its customer base, products and services;
- Risk measurement and management associated with products and services;
- Trained and informed directs;
- Comprehensive policies, procedures and practices;
- Thorough and ongoing due diligence of customer base; and
- An understanding of customer business models.
Bottom line, an institution should have a strong risk management and compliance culture, perform effective due diligence and have an effective suspicious activity monitoring program.
NAFCU Webcast. What’s New and What’s Next with NAFCU’s Regulatory Affairs Team - Thursday, August 20, 2:00 – 3:30pm EST. Absorb the latest updates from the CFPB and NCUA and ensure your credit union is prepared for new and upcoming changes. NAFCU’s Regulatory Affairs team is here to provide you with the tools and knowledge you need to keep your credit union playing by the rules.
Unusual DC Beach. So I’m sure most of you think we’re a little wacky here in Washington, DC. Well, maybe we are? One of my colleagues and I went to this beach party in DC this past Tuesday evening. Yes, you are looking at an actual exhibit in the National Building Museum in the heart of Washington, DC called the BEACH and here it is: