Do you or does your company engage in transactions with foreign companies or individuals? Do you have business or financial relationships with any kind of foreign entity that exists within a country or region that is on a Federal watch list?
The Office of Foreign Assets Control (OFAC) may be more important to you than you think. It is often cited as one of the most powerful Federal agencies most people have never heard of. To illustrate its power, OFAC settled for a $1 billion fine on BNP Paribas in June 2014 for money laundering on behalf of Sudan and other entities, part of a whopping $9 billion penalty in total.
OFAC is a U.S. Department of the Treasury agency that enforces trade and economic sanctions in support of U.S. foreign policy and national security. Its emphasis is on anti-money laundering actions against both state and non-state actors to combat foreign terrorism, drug trafficking, arms dealing, and other threats to national security. Its broad mandate as part of national security policy and very potent powers make it important for you to know how to cope with the sanctions risks it poses. … Continue reading
Anti-Money Laundering (AML) regulations for financial institutions—including most cash-handling businesses like armored car services—are risk-based. That is, the regulations recognize that the tremendous variation in the regulated businesses requires an approach that adjusts based on the risks a business actually faces.
Thus, the first step toward compliance with BSA/AML requirements is to perform an assessment of risk to produce a risk profile of the business. The risk profile will form the basis for a compliance program that will be subject to review by regulators and may be exposed to enforcement actions, so it is critical to get it right.
The risk assessment is conducted in two steps: (1) identify the specific risk categories for a business, and (2) evaluate these risks as they pertain to BSA/AML.
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One of the most important ways to ensure that your anti-money laundering program is in compliance with Bank Secrecy Act / Anti-Money Laundering (BSA/AML) requirements is to submit it to independent testing or auditing. Regular internal audits are always recommended, but an external auditor has the distance and perspective needed to give you added confidence in your program.
The independent audit should focus on how your organization’s policies, procedures, and processes are organized to support AML compliance. Given the complexity and importance of the issue, it will be critical to hire a consultant who is an expert in the BSA policy intent and the regulatory apparatus that goes with it. Best practice is to conduct the external audit every 12 to 18 months, though banking and credit institutions may have more frequent assessments. … Continue reading
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).
Financial organizations need to build AML compliance systems that assist trained employees to flag suspicious transactions as efficiently as possible. Internal controls and procedures should have the means to recognize clues that a transaction is potentially illegal, and ensure that employees know it. There are a number of factors these controls would monitor, mostly concerning a customer’s behavior. … Continue reading
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.
Financial managers and auditors are familiar with the concept and implementation of internal controls. The difference is that controls as part of an AML compliance program will be focused on mitigating risks discovered in a money laundering risk assessment. Further, internal controls as part of an AML program must be designed to generate the mandated reports and other surveillance, reporting, and records retention required by the Banking Secrecy Act, FinCEN and the Office of Foreign Assets Control, among others. … Continue reading