Risk-Based Approach to Financial Crime Gains Traction Amid COVID-19 Pandemic

Regulatory Relief for Banks and Financial Institutions During the Pandemic

In response to the challenges posed by the coronavirus disease (COVID-19) pandemic, the Office of the Comptroller of the Currency (OCC) has expressed support for a risk-based approach to managing Bank Secrecy Act (BSA) compliance programs. This move aims to ease the burden on banks and financial institutions in meeting certain BSA obligations.

OCC’s Decision and FinCEN’s Updated Notice

• The OCC’s decision comes after an updated COVID-19 notice issued by the Financial Crimes Enforcement Network (FinCEN), which recognizes the difficulties faced by financial institutions in meeting certain BSA obligations, including regulatory timing requirements for report filings.
• FinCEN’s notice provides for certain regulatory relief under the risk-based approach to BSA compliance.

Evaluating a Bank’s BSA Compliance Program

According to the OCC, when evaluating a bank’s BSA compliance program, examiners will consider the actions taken by banks to protect and assist employees, customers, and others in response to the COVID-19 pandemic. This includes:

• Reasonable delays in BSA report filings
• Beneficial ownership verification or re-verification requirements
• Other risk management processes

Risk-Based Approach Encouraged During the Pandemic

The OCC is encouraging banks to continue employing a risk-based approach to BSA compliance as they address the COVID-19 crisis. The agency has also recognized that meeting certain regulatory timing requirements for BSA filings and bank-imposed timing requirements for other BSA risk management processes may be challenging during the pandemic.

Regulatory Relief and Exemptive Measures

• FinCEN’s updated notice reminds financial institutions of its September 2018 ruling, which granted exceptive relief to covered financial institutions from the requirements to identify and verify the identity of beneficial owners when a legal entity customer opens a new account.
• The notice also suspends implementation until further notice of the February 6, 2020, ruling on Currency Transaction Report filing obligations involving sole proprietorships and entities operating under a “doing business as” name.

OCC’s Commitment to Supporting Banks During the Pandemic

The OCC is committed to promoting the successful implementation of the CARES Act, the expeditious disbursal of CARES Act funds, and the safety and security of banks and the financial system during this difficult period. The agency is working with affected banks to reduce burden when scheduling examinations or inspections and will take into account each bank’s particular circumstances.

Contacting Examiners and Communicating COVID-19 Concerns

The OCC encourages banks to contact their examiners regarding any BSA compliance concerns and to communicate COVID-19-related concerns to FinCEN via a specific drop-down category on the FinCEN website.