Last month the US federal banking agencies (the Federal Reserve Board, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency, and the National Credit Union Administration, collectively, the “US banking regulators”) and the Financial Crimes Enforcement Network (“FinCEN”) the US anti-money laundering (“AML”) agency, issued statements providing guidance on their approaches to evaluating whether to impose an enforcement action for violations of the AML law informally referred to as the Bank Secrecy Act (“BSA”), which, through regulations, imposes various AML compliance requirements on many different types of financial institutions, including banks.
US Banking regulators
The US banking regulators’ statement updated previous guidance issued in 2007 on their approach to imposition of AML enforcement actions. In their statement, the US banking regulators clarify that enforcement actions generally will not be brought for isolated or technical BSA violations.
The US banking regulators’ statement discusses the types of ways in which it can address AML deficiencies, the conditions under which they generally would take certain actions, and the factors they take into account when reviewing the details of a proposed violation. The US bank regulators can deal with BSA violations can raise issues with the bank directly in a non-public manner, in meetings or written communications in connection with deficiencies in AML compliance that were noted in an examination report or other written communication to the bank’s board of directors.
The US banking regulators also can issue public enforcement actions such as Cease and Desist Orders. The US regulators note in their Statement that these could be used for violations of the AML compliance requirements such as failure to have a written AML compliance program, failure to implement an adequate AML compliance program already in place, or failure to correct substantive AML compliance deficiencies previously identified but not properly remedied.
FinCEN’s statement addresses all of the financial institutions under its jurisdiction for AML compliance, which besides banks include broker dealers, money services businesses and casinos.
FinCEN stated that its objective in releasing this document was to bring clarity and transparency to its approach to imposing enforcement actions. As with the US banking regulators, FinCEN’s statement discusses the enforcement tools it can use, such as imposition of an administrative action requiring various remedial measures, or making criminal referrals to law enforcement agencies for further investigation. In addition to the factors noted above that the US banking regulators consider in deciding whether to impose an enforcement action, FinCEN also considers factors such as the “Impact or harm of the violations on FinCEN’s mission to safeguard the financial system from illicit use, combat money laundering, and promote national security.”