In the wake of the Capital One enforcement action by the Office of Foreign Asset Control (OFAC) earlier this year, financial institutions have been on alert to ensure they are in compliance with the Bank Secrecy Act (BSA). Regulators have already implemented several changes to help improve compliance and more changes are expected in the near future. In this blog post, we will discuss recent developments in the BSA and what these changes mean for financial institutions.
Recent Changes to the BSA
The Financial Crimes Enforcement Network (FinCEN) has recently issued advisory guidance intended to help financial institutions better identify money laundering risks and improve their anti-money laundering (AML) programs. The guidance focuses on six key risk areas which include customer risk factors, products and services, geographic risk factors, delivery channels, third-party relationships, and suspicious activity monitoring. Financial institutions are expected to use this advice when examining their own AML programs and identifying potential weaknesses or areas of improvement.
In addition to FinCEN’s advisory guidance, regulators have also identified specific factors that must be considered when examining a financial institution’s AML program. These include reviewing a financial institution’s customer due diligence procedures, transaction monitoring processes, suspicious activity reporting mechanisms, training programs for employees, and data analytics capabilities. It is important that financial institutions stay up-to-date on these changes as they may be subject to additional regulatory scrutiny if they do not comply with updated regulations or guidelines.
What This Means for Financial Institutions
The recent developments in BSA enforcement demonstrate that regulators are serious about cracking down on money laundering activities and ensuring that financial institutions are compliant with all relevant laws and regulations. As such, it is incumbent upon chief risk officers (CROs), chief audit officers (CAOs), and chief compliance officers (CCOs) at financial institutions to ensure that their internal processes meet regulatory requirements and adhere to best practices for preventing money laundering activities. This includes regularly assessing their existing AML programs against industry standards as well as any new regulations or guidelines issued by regulators. Furthermore, CROs should also take steps to ensure their staff members receive adequate training on how to identify suspicious activity in order to better safeguard against money laundering activities within the organization’s operations.
Financial institutions should take note of recent changes brought forth by regulators concerning the Bank Secrecy Act (BSA). Compliance with these regulations is paramount—not only due to potential legal implications but also because failing to do so can result in reputational damage for an organization. Chief Risk Officers (CROs), Chief Audit Officers (CAOs), and Chief Compliance Officers (CCOs) should all make sure their internal processes adhere to industry standards as well as any new regulations or guidelines issued by regulators in order keep their organizations compliant with the BSA and guard against money laundering activities within their operations. By staying abreast of current regulatory requirements related to anti-money laundering efforts—and taking proactive steps towards compliance—financial institutions can protect themselves from potential legal penalties while also safeguarding their reputation among customers and stakeholders alike.
