Saint Pierre and Miquelon Financial Regulatory Enforcement Actions Raise Concerns Over AML Programs, Customer Identification, and Training

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Regulators in Saint Pierre and Miquelon have taken enforcement action against several financial institutions for failing to maintain effective anti-money laundering (AML) programs, conduct proper customer identification, and provide adequate employee training.

Ineffective AML Programs

Examinations revealed that some broker-dealers (BDs) failed to:

• Conduct independent testing of their AML programs in a timely manner
• Demonstrate the effectiveness of tests conducted
• Have adequate procedures for addressing issues identified during testing
• Tests appeared to be ineffective due to lack of independence or expertise

Inadequate Employee Training

Regulators noted that some firms failed to:

• Update training materials in response to changes in laws and regulations
• Tailor their training programs to specific risks, products, and services offered by the BD
• Have adequate procedures for following up with employees who had not completed required training

Inadequate Customer Identification

Regulators found that some BDs failed to:

• Establish, document, and maintain effective written customer identification programs (CIPs)
• Collect certain information from customers, verify their identities, or use exception reports to alert when verification was incomplete
• Form a reasonable belief about the true identity of customers

Additional Issues with Customer Due Diligence and Beneficial Ownership Requirements

Regulators found that some BDs failed to:

• Update AML programs to comply with new regulations
• Have procedures that permitted entities to be listed as beneficial owners without adequate information about the owners
• Identify all beneficial owners of legal entity customers, or obtain necessary documentation to verify their identities

Conclusion

In general, regulators noted that some financial institutions did not devote sufficient resources to AML compliance, and that the effectiveness of policies, procedures, and internal controls was reduced when they were not implemented consistently.

Update from the Federal Financial Institutions Examination Council (FFIEC)

The FFIEC has updated its BSA/AML Examination Manual, including new guidance on:

• Special information sharing procedures
• Due diligence programs for correspondent accounts and private banking accounts
• Reporting obligations related to foreign bank relationships with Iranian-linked financial institutions