FinCEN has no examination staff, although compliance and enforcement personnel do participate in selected exams. What constitutes a “financial institution” under the BSA is broadly defined in 31 U.S.C. [2] Specified unlawful activities (SUAs) include hundreds of crimes, from drug trafficking and securities fraud, to foreign and domestic public corruption. Your use of this site to is subject to our, Search The Complete Compliance and Ethics Manual 2021, Anti-Money Laundering Compliance Programs for Financial Institutions and Other Businesses. They are all involved in one way or another with some form of money laundering. § 5312(a)(2). Cyber-events can target or affect funds directly—such as in cases of fraud, identity/credential theft, and misappropriation of funds. The BSA officer should coordinate responses and remedial measures in response to audit and examination issues, criticisms, and recommendations, and report to appropriate management, senior management, and the board if remedial actions are not on track or appear insufficient. Prosecutors are directed to consider whether there is a compliance program that is “adequately designed for maximum effectiveness in preventing and detecting wrongdoing by employees and whether corporate management is enforcing the program or is tacitly encouraging or pressuring employees to engage in misconduct to achieve business objectives.” To make this determination, prosecutors are to consider not only whether there is a compliance program on paper, but also if the program was designed, implemented, reviewed, and revised in an effective manner, including by determining whether there was sufficient staff to audit the program and whether adequate information about the program was disseminated to staff.[6]. Family members deposit the cashier’s checks to an account for a charity controlled by a terrorist organization in a Middle Eastern country. Consideration should be given to including a discussion of money laundering in the institution’s ethics policy. It assists its … USA PATRIOT Act certification update forms are required to be executed every three years or sooner if any of the information changes. The term “money laundering” conjures images from films of the mafia counting piles of cash in back rooms. Brokerage accounts. Some of the key requirements are summarized below: Currency Reporting for Financial Institutions and Cash Reporting for Other Businesses. [26] It is important to track and document every step in the SAR review and investigative process and to document decisions not to file. Pursuant to an amendment to the BSA statute added by the USA PATRIOT Act and the implementing BSA regulations, banks, broker-dealers, futures commission merchants and introducing brokers in commodities, and mutual funds are required to develop a Customer Information Program (CIP) as part of their AML programs. The tenets of the document apply equally to any business’s AML program, not just those of financial institutions: Leadership, management, and the board must be visibly and actively engaged in creating a culture of compliance; Compliance should not be compromised by revenue interests; Information should be shared within different areas of the organization to facilitate identifying potential suspicious activity; and. Independent Testing. A Chinese “manufacturing” customer of a Chinese bank with a correspondent account at a New York bank sends wire transfers routinely through this correspondent account to Mexican businesses. In part with a view toward the risk of successor liability, the BSA officer should be in a position to advise senior management and the board on the acquisition and to help develop a plan to integrate the acquired institution into the financial institution’s AML program. They added that PEPs “should not be confused with the term ‘senior foreign political figure’ (SFPF) as defined under the BSA private banking regulation, a subset of PEPs.”. CIP is the first building block for CDD. Financial institutions also must implement safeguards to ensure the confidentiality of the requests and the responses. Section 314(b)—Voluntary Information Sharing Among Financial Institutions. Structuring involves the breaking down of amounts over $10,000 into transactions of $10,000 or less for the purpose of evading cash reporting requirements or the breaking down of transactions into amounts under $3,000 to avoid the funds transfer recordkeeping or monetary instrument recordkeeping requirements, discussed below. Covered financial institutions also should periodically update the information and review the account activity to identify suspicious activity. If a decision were made to retain a customer against the recommendation of the BSA officer, there should be an established escalation process within the financial institution to inform senior management and the board about the decision. Foreign shell banks are banks that are licensed by jurisdictions where they are not authorized to provide services (offshore licensed) and that have no physical presence in any country—no physical address, no employees, and no records—and that are not subject to inspection by the licensing authority. [9] This document also offers insight into government expectations for AML programs. © 1988-2021, Many states have parallel money laundering criminal provisions and parallel anti-money laundering regulatory requirements for financial institutions that they license and regulate, e.g., state-licensed banks and MSBs, such as check cashers and money transmitters. Funds Transfer Recordkeeping and the “Travel Rule.” Specific records are required to be retained relating to funds transfer of $3,000 or more by banks, broker-dealers, futures commission merchants and introducing merchants in commodities, mutual funds, casinos, and MSBs. Quality Assurance and Compliance Testing. There are no regulatory requirements in relation to the Investment Manager or Promoter of a SFPF. Reviews of Public Source Information and Other Risk Indicators. The contents of an AML program can vary widely depending on the nature of the business; the money laundering risks to which the business is exposed with respect to its customers, its products and services, its geographic locations and markets; and the specific AML regulatory requirements and regulatory expectations applicable to the business. Similarly, when a financial institution acquires another financial institution or the accounts of another institution, the BSA/AML risk of the acquisition should be considered and assessed to determine what further due diligence may be warranted upon acquisition and whether there are any gaps in the compliance program that should be addressed. In cases where there have been serious breakdowns in BSA internal controls, resulting in a financial institution becoming involved in criminal activity, there have been a number of coordinated or parallel civil and criminal settlements, including prosecutions or deferred prosecutions and forfeitures based on the BSA criminal violations. Under Section 312 of the USA PATRIOT Act and 31 C.F.R. [45] For purposes of the CMIR requirement, “monetary instruments” include US and foreign currency, traveler’s checks in any form, incomplete negotiable instruments, and negotiable instruments or securities in bearer form. There are strict and detailed confidentiality rules with respect to SARs and SAR information.