Financial Crime World

Enforcement Actions for Bank Secrecy Act (BSA) and Anti-Money Laundering (AML) Regulations

Overview of Enforcement Actions

The Bank Secrecy Act (BSA) and Anti-Money Laundering (AML) regulations in the United States are enforced by various agencies to prevent money laundering, terrorist financing, and other illicit activities. The following sections outline key aspects of enforcement actions related to BSA/AML compliance programs.

Enforcement Actions for BSA/AML Compliance Programs

Agencies may take formal or informal enforcement actions to address violations of BSA/AML compliance programs. These actions can be based on isolated or technical issues or more severe problems that affect the institution’s overall compliance program.

  • Types of Enforcement Actions: Formal and informal enforcement actions may include, but are not limited to:
    • Written warnings
    • Cease-and-desist orders
    • Civil monetary penalties
    • Revocation or suspension of licenses

Individual Component or Pillar Requirements

Each component or pillar within a bank’s compliance program has specific requirements, and institutions must ensure they meet these standards to avoid enforcement actions.

  • Key Components: Some key components of BSA/AML compliance programs include:
    • Customer due diligence
    • Beneficial ownership
    • Foreign correspondent banking
    • Suspicious activity reporting (SAR)

Other BSA/AML Requirements

Institutions must comply with various other BSA/AML requirements, including:

  • Customer Due Diligence: Financial institutions must conduct customer due diligence to identify and verify the identity of customers.
  • Beneficial Ownership: Institutions must maintain records of beneficial owners and report suspicious transactions involving potential money laundering.
  • Foreign Correspondent Banking: Banks must comply with regulations related to foreign correspondent banking, including reporting requirements for cash and monetary instrument transactions.

Suspicious Activity Reporting Requirements

The regulations require financial institutions to file a Suspicious Activity Report (SAR) when they detect certain known or suspected criminal violations or suspicious transactions. These may include:

  • Types of Activities: Some examples of activities that must be reported include:
    • Insider activity
    • Criminal violations aggregating $5,000 or more
    • Suspicious transactions involving potential money laundering

Enforcement for Failure to File SARs

The Agencies will take supervisory action if an institution fails to file a SAR (or SARs) in appropriate circumstances, indicating systemic breakdowns in policies, procedures, or processes to identify and research suspicious activity.

  • Consequences: Institutions that fail to file SARs may face civil monetary penalties, fines, or other enforcement actions.

Other BSA Reporting and Recordkeeping Requirements

Institutions are subject to various additional BSA reporting and recordkeeping requirements set forth by the Treasury Department. These include:

  • Cash and Monetary Instrument Transactions: Financial institutions must report cash and monetary instrument transactions over $10,000.
  • CTR Filing and Exemption Rules: Institutions may be exempt from filing Currency Transaction Reports (CTRs) in certain circumstances.

Conclusion

The enforcement of BSA/AML regulations is a critical component of preventing money laundering, terrorist financing, and other illicit activities. Financial institutions must comply with various requirements, including customer due diligence, beneficial ownership, foreign correspondent banking, and suspicious activity reporting. Institutions that fail to file SARs or comply with other BSA/AML requirements may face enforcement actions, including civil monetary penalties, fines, or revocation of licenses.

Signatures

The following is a sample signature block for the document:

  • [Name], General Counsel
  • [Federal Reserve]
  • [Name], General Counsel
  • [Office of the Comptroller of the Currency (OCC)]
  • [Name], General Counsel
  • [Financial Crimes Enforcement Network (FinCEN)]

Please note that this is a sample and actual signatures may vary based on the specific regulatory bodies responsible for enforcing BSA/AML regulations in the United States.