U.S. regulators issue guidance on AML enforcement actions
Federal banking regulators on Thursday clarified that they generally do not issue cease-and-desist orders for minor deficiencies in a bank’s anti-money-laundering program or isolated violations of Bank Secrecy Act rules.
In a joint statement, the Federal Reserve, Federal Deposit Insurance Corp., Office of the Comptroller of the Currency and National Credit Union Administration updated their guidance on how they evaluate violations of AML rules.
“Violations or deficiencies in an institution’s BSA/AML compliance program communicated to the institution in a report of examination or through other written means that are determined to be isolated or technical are generally not considered problems that would result in a mandatory cease and desist order,” the agencies said.
The agencies also listed four pillars for an institution’s AML compliance program. They include internal controls for ongoing AML compliance, independent testing, designating individuals to coordinate AML compliance and proper training for personnel involved AML compliance.
The agencies said financial institutions’ AML compliance programs must include customer identification programs that ensure firms “form a reasonable belief” that they know the identity of their customers.
The guidance highlighted scenarios in which regulators will issue cease-and-desist orders for AML violations.
Financial institutions that lack a “reasonably designed” AML program or do not address previously reported AML problems could face the threat of such an order, the guidance said.
For example, an institution will be issued a cease-and-desist order if it has deficiencies in the required independent testing component of the AML compliance program that are combined with signs of highly suspicious activity.
By Neil Haggerty, 13 August 2020, published on the American Banker