By their very nature, money launderers will go to great lengths to cover their tracks. In the process, they use the normal activities of legitimate businesses like banks, credit unions, money service businesses, and other financial services organizations to help them “clean” ill-gotten gains. One of the strongest tools financial institutions have in combating the covert use of their services for illegal ends is to Know Your Customer (KYC).

The Mandate for BSA/AML Compliance

The problem is that the legitimate businesses used for money laundering may inadvertently fall into non-compliance with Bank Secrecy Act (BSA)/Anti-Money Laundering (AML) requirements. Since the flow of funds through money laundering can be used to finance drug-related, terrorist, or other illegal activities, the issue has been raised to the level of national security policy. There is little wriggle room: virtually all financial services businesses are responsible for designing and implementing risk-based anti-money laundering controls.

Several units of the U.S. Department of the Treasury are charged with promoting, monitoring, and enforcing compliance with anti-money laundering rules, including the Financial Crimes Enforcement Network (FinCEN), which has oversight of the system as designated administrator for BSA/AML compliance. Financial institutions that are found to have facilitated money laundering, even if inadvertently, can be heavily fined. … 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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