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Interagency Statement on Sharing Bank Secrecy Act Resources

Posted on October 8, 2018 at 2:05 PM

The U.S. Treasury and federal banking and credit union regulators issued a joint statement focusing on smaller institutions, allowing these operations to pool financial crime compliance resources to lower costs, improve efficiency and potentially get access to more expertise and greater independence.

The Financial Crimes Enforcement Network (FinCEN), the Office of the Comptroller of the Currency (OCC) Federal Reserve (Fed), Federal Deposit Insurance Corp. (FDIC) and National Credit Union Administration (NCUA) stated it was time to make a more formal ovation to smaller entities with similar risk profiles so they could experiment and innovate to better battle a more aggressive array of criminal, terror and cyber groups.

The statement follows increased focus on how to improve the results of anti-money laundering (AML) programs, which cumulatively spend billions of dollars annually, yet only identify, seize, freeze and forfeit mere percentage points of the trillions of dollars in illicit finance flowing annually through major financial centers. The tipping point came as a result of analysis and conclusions from a recent working group including these agencies and Treasury’s Office of Terrorism and Financial Intelligence “aimed at improving the effectiveness and efficiency of the BSA/AML regime,” they said.

In these cooperative arrangements, say regulators, smaller financial institutions, such as community banks and credit unions, could get access to trainers – training is one of the key prongs of an AML program – with more expertise than they may have had the budget for individually.

The arrangements may be similar in how banks juggle dual use employees, for instance, when a bank is so small that the AML officer must wear other hats and may also have oversight of certain business functions.

Benefits and Challenges

The statement gives several examples where sharing resources could work and a few where they won’t.

Benefits

· reviewing, updating, and drafting BSA/AML policies and procedures;

· reviewing and developing risk-based customer identification and account monitoring processes;

· tailoring monitoring systems and reports for the risks posed; and

• helping each other is the independent testing prong of the AML program.

Challenges

· assigning responsibility - if the shared resource of one bank makes a mistake that impacts a different institution, the blame still falls squarely on the bank where the error was made – an institution can’t blame the actions of the individual working on its behalf from the other bank.

· cooperating on the operating of a compliance program does not invoke the protections of Patriot Act Section 314(b), which allows institutions to share information on individuals, companies and entities suspected of illicit activity, even though any of the banks involved can’t disclose if they ever filed a suspicious activity report (SAR).

· sharing is caring mantra is attempting to share a compliance officer among multiple banks or credit unions.

Read More:

Press Release

https/www.fincen.gov/news/news-releases/federal-agencies-issue-joint-statement-banks-and-credit-unions-sharing-resources

Joint Statement

https/www.fincen.gov/sites/default/files/2018-10/Interagency%20Statement%20on%20Sharing%20BSA%20Resources%20-%20%28Final%2010-3-18%29%20%28003%29.pdf


Categories: AML and Sanctions