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Financial Services Law Insights and Observations

Comptroller Identifies BSA/AML Risks, Calls For Increased Information Sharing

OCC Anti-Money Laundering Bank Secrecy Act Bank Compliance

Consumer Finance

On November 17, the Comptroller of the Currency, Thomas Curry, delivered remarks at the American Bar Association/American Bankers Association BSA/AML conference in which he identified common BSA/AML compliance risks and failures, and identified steps industry participants and regulators should take to improve compliance. The Comptroller explained that successful BSA/AML compliance is dependent not only on “the strength of the institution’s technology and monitoring processes, and the effectiveness of its risk management,” but also on strong corporate governance processes and management’s willingness to commit adequate resources. Comptroller Curry called on banks to commit sufficient resources and take a “holistic approach” toward BSA/AML compliance, for example, by dispersing accountability throughout the organization instead of concentrating compliance in a single unit. Noting that this is particularly important in the M&A context, the Comptroller stated that it is vital that due diligence go beyond a target’s credit portfolio to include a review of the target’s BSA/AML program. In addition to lack of compliance resources, the Comptroller identified as risk trends: (i) poor management of international activities—foreign correspondent banking, cross-border funds transfers, bulk cash repatriation, and embassy banking; (ii) third-party relationships and payment processors; and (iii) emerging payment technologies, including virtual currencies. He stressed the importance of information sharing among institutions and between institutions and their regulators, and called for (i) legislation that would encourage the filing of SARs by strengthening the statutory safe harbor from civil liability for filing financial institutions, (ii) broadening the Patriot Act safe harbor for institutions that share information with each other about potential crimes and suspicious transactions, and (iii) exploring ways government can provide more robust and granular information about money laundering schemes and typologies to institutions in a more timely way.

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