If you run a business that facilitates or conducts money transactions, or transactions in other liquid commodities, you are no doubt aware of FinCEN. Rest assured that FinCEN is aware of you, too. And we predict it’s only a short matter of time before their foreshadowing of AML enforcement actions against the cash servicing and transport industry becomes a harsh reality.
The Financial Crimes Enforcement Network (FinCEN) is the arm of the U.S. Treasury charged with investigation and enforcement of Bank Secrecy Act provisions intended to block the financial sources of illegal and terrorist organizations. Traditionally, the BSA applied to common financial institutions like banks and credit unions. But as banks began to offload services to third party vendors and the number of money-related businesses like check cashers and wire transfers proliferated, the BSA has been applied to an ever-wider array of businesses.
Most of these newer businesses are collectively known as Money Service Businesses (MSB). Businesses that transmit money, issue money orders, cash checks, deal in foreign currencies, or a number of other types of transactions, are required to register with FinCEN and maintain an effective Anti-Money Laundering (AML) program. … Continue reading
As 2015 comes to a close, we are pleased to share our most popular articles from the Risk Management Blog in 2015.
1. 4 Red Flags of Money Laundering or Terrorist Financing
One of the most important aspects of BSA/AML compliance is the responsibility it places on regulated financial entities to report suspicious transactions. This responsibility requires an organization to be able to monitor and identify transactions, evaluate them in real time, and flag the ones that are suspicious. In many cases, a Suspicious Activity Report (SAR) should be filed with the Financial Crimes Enforcement Network (FinCEN).
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2. 5 Key Components of a BSA/AML Compliance Program
You are most likely familiar with the Financial Crimes Enforcement Network (FinCEN) which is a bureau of the Treasury Department. FinCEN’s mission is “to safeguard the financial system from illicit use and combat money laundering and promote national security” through the use of financial services information.
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3. The Important Role of Internal Controls for AML Compliance
It is well understood that money launderers use deceit or theft to capture the processes of financial entities for illicit purposes. As a result, your AML compliance program must implement internal control designs that increase the chances of preventing or detecting such activities.
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“Use of third parties reduces management’s direct control of activities and may introduce new or increase existing risks, specifically operational, compliance, reputation, strategic, and credit risks as well as the interrelationship of these risks. Increased risk most often arises from greater complexity, ineffective risk management by the bank, and inferior performance by the third party.” – Office of the Comptroller of the Currency, October 30, 2013 Bulletin
It’s well established that banks are increasingly turning to third parties to handle a wide range of activities and processes, from cash transport and ATM replenishment to IT and other services. However, when you examine the latest standards and scrutiny placed on financial institutions by the FDIC, CFPB, FFIEC, OCC, FinCEN, and others, it is clear that whether the activities are being performed by the bank itself or a third-party vendor, it’s the bank that carries the bulk of the risk. … Continue reading
Firms must comply with the Bank Secrecy Act and its implementing regulations (“AML rules”). – Financial Industry Regulatory Authority
The Bank Secrecy Act (BSA) and all the related laws that have been passed since the BSA began in 1970, aim to harden targets within the financial system against money laundering schemes. AML rules accomplish this by requiring covered institutions to implement an Anti-Money Laundering Plan (AMLP)—essentially putting surveillance into the hands of the financial institutions in the fight against money laundering.
Your AMLP must comply with the guidelines in the rules, providing authority and controls, generating a set of mandatory reports, exercising customer due diligence, and maintaining an information trail. Even though each financial institution is permitted to develop the plan consistent with its own risk-adjusted profile, The AMLP is a serious undertaking.
Our Infographic on Anti-Money Laundering provides a checklist of the background and components of an AMLP. Although the final plan will be greatly more detailed, the infographic organizes what has to be done in context so why it has to be done is easily understood.
Check out the full infographic here: … Continue reading
“The fight against money laundering and terrorist financing is a pillar of U.S. national security and a strong financial system.” – Adam J. Suzbin, Department of the Treasury
Money launderers will go to great lengths to use the normal activities of legitimate banks, credit unions, and money service businesses to help them “clean” ill-gotten gains. The Bank Secrecy Act (BSA) sets forth AML rules, to help financial institutions identify and report potential money laundering and terrorist financing activities.
Our latest infographic highlights the typical 3-step money laundering cycle and outlines key components of an effective anti-money laundering program. Use this infographic as a quick reference to educate your employees and stakeholders on the importance of finely-tuned AML controls. … Continue reading