Financial Crime World

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AML Procedures for Banks in the United States

The United States has implemented stringent anti-money laundering (AML) procedures to prevent financial institutions from being used for illicit activities. The Office of the Comptroller of the Currency, Federal Reserve System, Federal Deposit Insurance Corporation, and National Credit Union Administration have issued regulations that require banks to establish and maintain AML programs.

Reporting Requirements

  • Banks are required to file reports with the Financial Crimes Enforcement Network (FinCEN) on transactions that exceed $10,000.
  • These reports must include information about the transaction, including:
    • Date
    • Amount
    • Parties involved
  • Banks are also required to file suspicious activity reports (SARs) when they detect a known or suspected violation of federal law or a suspicious transaction.

Customer Identification Programs

  • Banks are required to establish customer identification programs that verify the identity of customers who open accounts.
  • This includes:
    • Obtaining identifying information, such as name and address
    • Verifying it through government records

Due Diligence Programs

  • Banks must conduct due diligence on foreign correspondent accounts and private banking accounts to ensure that they are not being used for illicit activities.
  • This includes:
    • Reviewing the account holder’s background
    • Business practices
    • Financial transactions

Recordkeeping Requirements

  • Banks are required to maintain accurate and complete records of all transactions, including:
    • Customer information
    • Transaction amounts
    • Dates
  • These records must be kept for at least five years.

Penalties for Non-Compliance

  • Banks that fail to comply with AML regulations can face significant penalties, including:
    • Fines
    • Criminal charges
  • In addition, banks that are found to have engaged in illegal activities, such as money laundering or terrorist financing, can face severe consequences, including the loss of their charter.

Conclusion

The United States has implemented robust AML procedures to prevent financial institutions from being used for illicit activities. Banks must establish and maintain AML programs, report suspicious transactions, conduct due diligence on foreign accounts, and maintain accurate records. Failure to comply with these regulations can result in severe penalties.